ARPU & ARPPU Calculator

Understanding the ARPU and ARPPU — concept and principle

ARPU (average revenue per user) and ARPPU (average revenue per paying user) are core metrics for apps, games, subscriptions and online services. ARPU shows how much the whole user base earns on average; ARPPU shows how much the people who actually pay are worth. Comparing the two reveals whether growth should come from converting more users to payers or from earning more from existing payers. It works with any currency.

How it is calculated

• ARPU = revenue in the period ÷ active users in the period.
• ARPPU = revenue in the period ÷ paying users in the period.
• Paying share = paying users ÷ active users × 100%.

Use the same period for every input, for example one month, and the same definition of "active".

The principle

The three figures are tied together by one identity: ARPU = ARPPU × paying share. Revenue can therefore grow in two independent ways: more users paying (higher paying share) or each payer spending more (higher ARPPU). This decomposition is why freemium businesses track both. A small change in conversion can move ARPU as much as a big price increase.

Worked example

1. ARPU = $45,000 ÷ 30,000 = $1.50.
2. ARPPU = $45,000 ÷ 1,500 = $30.00.
3. Paying share = 1,500 ÷ 30,000 = 5%.
4. Check: $30.00 × 5% = $1.50.

How to read the result

ARPU is most useful for comparing with your cost to acquire a user and for tracking trends over time. ARPPU helps with pricing and offer design. If ARPPU is high but paying share is low, focus on onboarding and conversion; if paying share is healthy but ARPPU is low, test pricing, bundles or upgrades. Revenue per user over the whole customer lifetime matters more than one month, so combine ARPU with retention.

Common mistakes

• Dividing monthly revenue by total registered users instead of active users.
• Mixing gross revenue with net revenue after app store fees or refunds between periods.
• Comparing ARPU across companies that define "active" differently.

Frequently asked questions

What is the difference between ARPU and ARPPU?

ARPU divides revenue by all active users, including free users; ARPPU divides it only by users who paid.

Should ARPU use gross or net revenue?

Either works if you are consistent. Net revenue after platform fees is closer to what the business keeps.

How does ARPU relate to lifetime value?

Roughly, lifetime value builds up as ARPU per period summed over how long users stay, usually adjusted for margin.

Sources: Farris, Bendle, Pfeifer & Reibstein, Marketing Metrics (Pearson) — customer profitability metrics