What is ARPU?

ARPU is short for Average Revenue Per User, and is a metric used to measure the average amount of revenue generated per user of a product or service. It is a common metric in the tech industry, used to assess the health of a business and its growth potential.There are two main ways of calculating ARPU:

• Lifetime value (LTV) / Number of users
• Total revenue / Number of users

How is ARPU calculated?

There are two main ways of calculating ARPU:

• Lifetime value (LTV) / Number of users
• Total revenue / Number of users

Lifetime value (LTV) is the total amount of money that a customer is expected to spend on a product or service over the course of their lifetime. It is a key metric for subscription-based businesses, as it provides a way to measure the value of a customer.Total revenue is the total amount of money generated by a product or service. It is a simpler metric to calculate, but does not take into account the long-term value of a customer.Both methods have their advantages and disadvantages, and it is up to the business to decide which one is more appropriate for their purposes.

What are the benefits of ARPU?

There are several benefits to tracking ARPU:

• It provides a way to measure the health of a business - If ARPU is increasing, it indicates that the business is growing and generating more revenue per user. If ARPU is decreasing, it indicates that the business is stagnating or losing users.
• It can be used to assess the growth potential of a business - A business with high ARPU and low user growth has more potential for growth than a business with low ARPU and high user growth.
• It can be used to benchmark against competitors - Comparing ARPU can give insights into which business is more successful.
• It can be used to make decisions about product development and marketing - If ARPU is low, it may be necessary to focus on generating more revenue per user. If ARPU is high, it may be necessary to focus on acquiring more users.

ARPU is a valuable metric for businesses to track, as it provides insights into the health and growth potential of the business.

How can ARPU be increased?

There are several ways to increase ARPU:

• Increase prices - This is the most direct way to increase ARPU, but may not be feasible or desirable.
• Increase the value of products and services - This can be done by adding new features or improving existing features.
• Increase the number of paid users - This can be done by acquiring new users or converting free users to paid users.
• Decrease the number of free users - This can be done by reducing the number of free users or converting free users to paid users.

Increasing ARPU can be a challenge, but there are a number of ways to do it. The most important thing is to focus on providing value to users, as this will ultimately lead to more revenue.