ARPU or Average Revenue per Users is a macro measurement of the amount of revenue divided by total users. This data is important to illustrate the average each user is spending within your store.
Many social media companies such as Snapchat, Facebook, and Tik Tok utilize this measurement to make decisions. As well, subscription services use this statistic to illustrate their revenue. Knowing how much revenue each customer is bringing in, is crucial to illuminating internal strengths and weaknesses within your business.
There are both advantages and disadvantages to ARPU.
Advantages
Disadvantages
While there are quite a few disadvantages to using ARPU as a measurement, it is still beneficial to know and look at this macro measurement occasionally, as it can sometimes bring valuable insights to your business.
ARPU is calculated by dividing total revenue by the number of users over a given period of time.
Some ways to increase ARPU include increasing prices, upselling additional products or services, and offering subscription-based models.
ARPU represents Average Revenue Per User and the average revenue generated per customer or user. A "good" ARPU value varies significantly depending on the industry, business model, and market conditions. For some businesses, a higher ARPU indicates better profitability, while for others, a lower ARPU might be acceptable if they have a high volume of users.
ARPU trends are analyzed over time to monitor customer spending behavior and business performance changes. Increasing ARPU over time typically signifies improvements in customer engagement, retention, and upselling strategies.
According to the 2019 Global Mobile Market Report, ARPU (Average Revenue per User) has increased by 8.3% year-over-year from 2018 to 2019 in North America. (Statista, 2020).