The Average Revenue Per User (ARPU) determines how much revenue an app generates per paying customer in a given timeframe. LTV (lifetime value) and ARPU are similar metrics. The first indicates the average revenue a user contributes over the duration of their use of the app. The second determines the average revenue a user contributes at a given period. ARPU looks at the money generated through in-app purchases, clicks, subscriptions, paid downloads, or other means of app monetization.
ARPU gives app developers and user acquisition managers a good idea of the monetary value of users. This metric informs monthly revenue targets and underpins the gaps related to these goals.
By using ARPU and LTV simultaneously, companies can obtain a relatively accurate picture of the financial performance of an app. LTV can supplement ARPU findings, as it includes the install date and customer-use period.
Significance to Strategy Development
ARPU provides user acquisition managers with an immediate view of customer behaviors and preferences. They can use these insights to refine or change marketing focuses.
The formula for calculating Average Revenue Per User is:
Average Revenue Per User (ARPU) = Revenue generated (specific time period) ÷ Number of Users (specific time period)
A gaming app has $20,000 worth of in-app purchases and 1000 users. This means the ARPU is $20.
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