How to calculate ARPPU
Divide the period's revenue from paying users by the number of paying users. If 2,000 payers spent $18,000 in a month, ARPPU is $9.
ARPPU vs ARPU
ARPU divides by all active users. If those 2,000 payers were part of 20,000 active users, ARPU is $0.90 while ARPPU is $9. The gap between the two is the paying share: here, 10%.
ARPPU tells you how much a customer spends once they decide to pay. ARPU tells you what the whole audience is worth. A service can raise ARPU either by raising ARPPU or by converting more free users into payers.
Where ARPPU is most useful
In coin-based apps the average hides a wide spread: a small group of heavy spenders usually accounts for a large part of revenue. Look at the distribution as well as the mean.
- Freemium services, where most users never pay
- Coin-based apps, where spending varies enormously between payers
- Transactional services, to see how many rentals or purchases a buyer makes
- Comparing tiers and regions on spending per customer
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