Average revenue per user

Average revenue per user (ARPU) measures the typical revenue generated by each active user of a product or service within a specific time period.^[1] This foundational metric helps evaluate monetization effectiveness and compare performance across different user segments or time periods. ARPU provides a standardized way to measure revenue generation regardless of the product's pricing model.

The basic ARPU calculation divides total revenue by the total number of active users in a given period. For example, if a product generates $100,000 in monthly revenue from 2,000 active users, the monthly ARPU is $50. This calculation becomes more complex when accounting for different user types, such as free users versus paying customers.

ARPU variations across user segments, geographic regions, or acquisition channels reveal opportunities for revenue optimization. Higher ARPU usually indicates better monetization, while declining ARPU might signal pricing issues or changes in user mix (for example, more free users than paid users) that require attention.