ARPU
Also called: Average revenue per user
ARPU, average revenue per user, is total revenue in a period divided by the average number of active users in that period. It normalises revenue for base size, which makes it the cleanest way to see whether a business is monetising its customers better or simply acquiring more of them.
How it is calculated
ARPU = Total revenue in period / Average active users in period
Use the same period for both terms, and define active once. Mixing monthly revenue with end-of-period users overstates ARPU.
Why it matters for ARPU
ARPU is the outcome Markin optimises. Every opportunity, hypothesis and experiment is ultimately judged by whether it moved incremental revenue per user.
Related terms
ARPPUARPPU, average revenue per paying user, divides revenue only by users who paid in the period.ARPAARPA, average revenue per account, is revenue divided by the number of accounts rather than individual users.Lifetime valueLifetime value is the discounted margin a business expects from a customer over the whole relationship.Monetization rateMonetization rate is the share of active customers who pay anything in a period.