Average Revenue Per User (ARPU)

Learn the definition and meaning of ARPU along with an example

Average Revenue Per User (ARPU)
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It is the average revenue produced by a typical user. It displays the precise revenue that each user is contributing.

Why is it useful?

ARPU shows a number of things like the position of the company in the market with respect to its competitors. For example, if company X has more ARPU than company Y, one can infer that company X sells products at a premium.


In the year 2020, YouTube India’s ARPU → $2 (150 rupees)
Now YT has 2 groups of users. One gives revenue by watching ads & the other has purchased YT Premium. In the 1st group, the revenue can differ on the number of ads a user watches. Hence, even though some users might have contributed more than $2 to YT’s revenue, on average it was $2.
ARPU = {Total revenue} / {Total paying customers} $100 = {$1000}/ {10} Relation between ARPU & GMV: GMV / total users= ARPU