All you need to know about Average Revenue Per Paying User ARPPU

To make the offer seem more valuable, it’s a good idea to include bundles, discounts, and limited-time offers – they can boost purchases. For example, according to Clevertap, implementing limited-time offers can outperform other types of promotions by 8%. They can create a sense of urgency and encourage players to make a purchase. Useful for understanding daily revenue generation, especially for apps or games with high daily engagement.

Identify Opportunities to Reduce Cost

Learn what Average Revenue Per Customer (ARPU) is and how to calculate and increase it. Dive into the essential metric for business success in our guide. Explore Cost Per Sale (CPS) in digital advertising, its calculation and optimization for efficient ad strategies and increased profitability.

That’s especially true for casual games – it’s the main monetization method for this genre because casual gamers are not big spenders. One of the most effective ways to increase ARPU and ARPDAU is to offer enticing in-app purchase offers players can’t refuse. Depending on the game and genre, in-app purchases can include various boosts, power-ups, weapons, gear, currency, extra lives, loot boxes, game characters, skins, etc. Understanding the factors that influence ARPU (Average Revenue Per User) is essential for optimizing revenue generation strategies in mobile apps and games. The total number of users active during the specified period (daily, monthly, or yearly). By understanding ARPU, you can identify which user segments are the most valuable and develop targeted strategies to increase overall revenue.

Forecast revenue growth month over month

What works for a hyper-casual title is going to be different to an RPG. And run experiments to see how you can improve them.But most importantly, be honest with yourself. It doesn’t help anyone if you choose triggers that you know are going to get you higher figures.

ARPU calculation: How to calculate ARPU

A small cluster of high-spending customers could potentially inflate the average. Another issue is that ARPU disregards the expenses involved in acquiring or retaining customers. Thus, a soaring ARPU doesn’t necessarily translate into substantial profits. Finally, ARPU fails to provide insights into customer behavior or satisfaction levels, both of which are crucial for a business’s sustained success. Not every user contributes equally, and by pursuing a broad spectrum, especially those with minimal revenue impact, you might inadvertently deflate your ARPU.

• Zero in on who these people are and shape your marketing towards them.
• But in this article, we’ll talk about ARPU and ARPPU and explain in detail how to calculate, interpret, and optimize them.
• For example, an app that has 25,000 paying users, and generates $100,000 over a 30 day time period, would have an ARPPU of $4.00.
• Yes, businesses can experiment with different pricing strategies to potentially boost ARPU.

After uploading your file, you can create a report and access the editing tools. Look for “Create KPI or metric” and click “Add new measure.” This will open a window where you can easily calculate ARPU by selecting the relevant columns from your data. The first step involves organizing your data in an Excel or Google Sheets spreadsheet.

While many KPIs are valuable across businesses, some offer additional value to specific types of ecommerce brands. For example, the average revenue per unit is commonly tracked in subscription-based models to gauge the total number earned from each unit sold. ARPU (Average Revenue Per User) is a metric that tells you how much money your business makes, on average, from each customer over a specific period. It’s a key measurement for companies with subscription-based models, such as phone carriers, streaming services, or software-as-a-service (SaaS) businesses.

The number of purchases or purchase frequency can vary among users. Comparing ARPU with acquisition costs, such as CPA(Cost Per Action) and CPI(Cost Per Install), enables businesses to assess their ROAS(Return on Ad Spend) or marketing bottom line. This analysis helps determine the efficiency of marketing expenditures, allowing adjustments for more effective allocation of resources.

Adjust pricing plans based on what paid users care about.

Rotate the focus between ARRPU and CVR to keep your percent share of paying customers aligned with your long-term strategy. Ensuring a solid pricing structure—and making sure to reevaluate it frequently —can help brands increase their ARPU. When brands use ARPU in conjunction with SKU tracking, brands can improve their SKU management process.

Quality of Acquired Users

By breaking down ARPPU into subclasses, Singular helps mobile app businesses determine their most profitable channels and improve ad budget allocation. By measuring ARPU, you’re armed with the tools to learn which users are the most valuable to your business, and which ones aren’t. Another user only buys twice a year but spends $250 each time. The second user would have a higher ARPU and be more valuable to your business, even though they’re less likely to arppu calculation convert in any given month.

ARPU is calculated by dividing total revenue by the number of users during a period. The other side of ‘how users pay’ is how they consume a service. Some SaaS businesses have fairly stable consumption patterns – for example, business productivity applications and music streaming services. Others will expect users to switch on and off (e.g. holiday apps, digital tax submission). While some services are designed to scale at a moment’s notice (e.g. cloud cybersecurity solutions). Some SaaS products will charge incrementally to consume more of the service, access new features, or add more users.

Now, you might be wondering, “How can I use ARPPU to grow my business? We’ll give you actionable tips and strategies that you can apply to your business right away. In this article, we’ll tell you everything you need to know about these crucial metrics. This shows why ARPPU gives a more accurate picture of paying customer value. For example, if a company has produced $10 million in revenue with 10,000 customers, the ARPU is $100.

• ARPU provides insight into the monetization effectiveness of an app or game.
• Some players will download your game to multiple devices but actively play on one, others might download the game only to uninstall it immediately.
• If you’re not in the consumer space or a space with hundreds of thousands (if not millions) of potential customers, then you shouldn’t be chasing sub $100/m customers.
• Retention isn’t just about users returning — it’s about delivering value.

This metric can be eye-opening, especially for businesses offering both free and premium services. While ARPU considers revenue from all users, ARPPU only looks at revenue from paying users. This metric is handy for businesses that offer both free and paid services.