Average Revenue per User
What does Average Revenue per User mean?
Average Revenue Per User, abbreviated to ARPU, is a business ratio that translates as“average revenue per user“. This ratio indicates the average value of a customer for a company. The ARPU metric is mostly used by companies in the mobile industry, pay-TV and streaming services. In order to obtain comparable values, the average revenue per user is determined for a defined period, e.g. one month or one year. The value is a measure of the profitability of a company.
Calculation of the ARPU
Before the ARPU can be calculated, the period for the calculation must first be defined. Usually, the calculation is done for a month or a quarter. The value is determined by dividing the total revenue of the company in the specified period by the total number of customers in this period.
The formula is:
Total revenue / Total number of customers = ARPU
The calculation usually only takes into account those customers who regularly use the company’s services or who make use of the services in the form of a subscription in the case of streaming services, for example.
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