Average revenue per user (ARPU)

Average revenue per user, ARPU, expresses how much revenue a subscription or user-based business earns from a typical user, making it possible to compare monetization across companies or time periods regardless of total user count. It originated in telecommunications, where carriers report it to show how much each subscriber contributes on average, and has since spread to media, gaming, and subscription software.

The standard formula is total revenue over a period / average number of users over that period, with the specific definitions of "revenue" and "user" varying by company; some include only recurring revenue, others fold in one-time purchases, and the user base may be counted as total subscribers or active users. This ambiguity means ARPU figures are not always comparable across companies without checking the definition used.

ARPU is watched alongside churn rate and monthly recurring revenue because a growing user base with falling ARPU can still mean shrinking revenue, and it feeds directly into customer lifetime value models that multiply ARPU by expected tenure. A common pitfall is treating ARPU growth as automatically positive without checking whether it comes from real usage increases or from a shrinking, more price-tolerant user base after less committed users have already churned.