ARPU

Average Revenue Per User

A key financial performance metric used primarily in the telecommunications and media industries but also broadly applicable across different sectors, including online services and apps. It measures the average revenue generated per user or unit over a specific period, typically monthly or annually. ARPU is critical for assessing a company’s revenue generation efficiency and effectiveness from its user base.

ARPU Formula

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• Total Revenue: This refers to the total amount of income generated from all users/customers over a specific timeframe. This can include various streams such as subscriptions, advertising, and other services.
• Average Number of Users: This is calculated by taking the sum of the starting and ending number of users for the period, divided by two. It represents the average user base size contributing to the revenue.

ARPU is used to:

• Gauge the revenue-generating capability of a product or service.
• Identify which customer segments are more profitable.
• Help tailor marketing and pricing strategies to increase revenue per user.
• Benchmark performance against competitors.

By understanding and analyzing ARPU, businesses can make informed decisions about enhancing their revenue streams, improving customer service, and optimizing their overall marketing strategies.

• Abbreviation: ARPU