Back to Glossary
ARPU stands for "average revenue per user." It is a metric that shows how much revenue a business or app is earning per user. It is also known by the term "customer unit price." ARPU is useful for evaluating the monetization efficiency of an app and understanding the health of a business.
Why is this important?
Evaluation of Profitability
Through ARPU (Average Revenue Per User), one can assess how effectively a business is functioning with its user base. A high ARPU indicates efficient revenue extraction from users, signifying good business profitability.
Optimization of Monetization Strategy
By analyzing ARPU data, one can understand which pricing strategy is most effective and optimize revenue generation efforts.
Comparison with User Acquisition Cost
By comparing ARPU with the User Acquisition Cost (CAC), one can evaluate whether a business is sustainable. If ARPU exceeds CAC, the business is considered profitable.
Long-term Revenue Forecast
ARPU is useful for predicting future revenue. Based on the current ARPU and expected user growth rate, future revenue can be estimated.
Understanding Customer Segments
By analyzing ARPU for different user segments, one can understand which segment is most profitable and effectively allocate marketing and product development resources.
Evaluation of Business Models
ARPU is useful for comparing the profitability of different business models, such as subscription-based models, in-app advertising, and in-app purchases.
By comparing ARPU with industry standards and competitors, one can evaluate the competitiveness of a business and understand its position in the market.ARPU is a crucial metric for evaluating business profitability, optimizing monetization strategies, and ensuring sustainable growth.
Through proper data analysis and strategic decision-making, maximizing ARPU can contribute to business success.