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Average Revenue per User (ARPU)

What is average revenue per user?

Average revenue per user or ARPU is a key metric used in mobile app marketing. It specifically measures the average amount of revenue generated by an active user of a mobile app over a defined period (month, quarter, year).

How does average revenue per user work?

Mobile apps can generate revenue through various models, including:

  • In-app purchases: Users pay real money for virtual goods, subscriptions, or premium features within the app.
  • In-app advertising: Apps display ads from advertisers, and the app owner earns revenue based on impressions, clicks, or conversions.
  • Freemium model: The app is free to download, but users can unlock additional features or content through in-app purchases or subscriptions.

ARPU considers all these revenue streams and calculates the average amount each active user spends during the chosen timeframe.

How to measure average revenue per user:

The formula for ARPU is:

ARPU = Total Revenue / Number of Active Users (in a specific timeframe)

For example, if a social media platform generates $1 million in revenue during a month and has 100,000 active users, their ARPU for that month would be $10 (⁣⁣$1,000,000 / 100,000).

Why is average revenue per user important to marketers?

ARPU is a crucial metric for marketers because it helps them understand:

  • Monetization effectiveness: A rising ARPU indicates success in driving in-app engagement and converting user activity into revenue.
  • User value: By comparing ARPU across different user segments, marketers can identify which user groups generate the most revenue.
  • Campaign targeting: ARPU can help tailor marketing campaigns towards user segments with higher spending potential
  • Product development: ARPU informs product roadmap development by highlighting the features that contribute most to revenue generation.

Who needs to know what average revenue per user is?

  • App marketing manager
  • User acquisition manager
  • Performance marketing manager
  • App developer
  • Digital marketing manager
  • Marketing analyst

Use average revenue per user in a sentence:

"The mobile fitness app saw a significant increase in ARPU after introducing a personalized workout subscription plan, allowing them to invest in further app development and marketing initiatives."