Average Revenue Per User (ARPU)

Average Revenue Per User (ARPU), also sometimes referred to as Average Revenue Per Unit, is a measure used primarily by companies that offer subscription-based services to gauge the revenue generated per user or unit. It’s a useful metric for understanding the revenue generation capability on a per-user basis.

ARPU is calculated by dividing the total revenue by the number of users/subscribers.

For example, if a streaming service has 1000 subscribers and generates $5000 in a month, the ARPU for that month would be:

ARPU = Total Revenue / Total Users
ARPU = $5000 / 1000 = $5 per user

ARPU is a critical measure in industries like telecommunications, Software as a Service (SaaS), and digital media, where businesses offer various subscription plans to different user groups. Understanding ARPU can help these businesses make decisions about pricing, marketing, product development, and can assist in forecasting future revenue.