ARPU

Definition

ARPU (Average Revenue Per User) measures how much revenue each user generates over a period, typically monthly. It is calculated as total revenue divided by the total number of users (paying and free) over that period. For subscription apps, ARPU helps evaluate whether price increases are viable, how well conversion funnels work, and how different user segments perform.

A related metric is ARPPU (Average Revenue Per Paying User), which divides revenue only by paying users and is typically much higher than ARPU. ARPPU is more useful for subscription pricing decisions, while ARPU captures overall monetization including free users.

Examples

• An app with 50,000 users and $50,000 in monthly subscription revenue has an ARPU of $1.00 and an ARPPU of $10.00 (assuming 5,000 paying users).
• Raising the subscription price from $9.99 to $12.99 might reduce subscriber count but increase ARPPU — the net effect on MRR depends on the price elasticity of the user base.
• Tierux's pricing comparison tool uses a $10 average ARPPU as a central estimate to convert between MRR and subscriber counts.