What is ARPU? Meaning, formula and how to calculate it

ARPU meaning and formula

ARPU stands for average revenue per user. It answers one question: in a given period, how much revenue did the average user bring in? The ARPU formula is:

ARPU = revenue in the period ÷ users in the same period

Both numbers must cover the same period. Monthly ARPU uses one month's revenue and that month's users; for a quarter, divide quarterly revenue by the average users in the quarter, then by three to get a monthly figure. Annual ARPU is not twelve times a single month, because the people and the prices change during the year.

Subscription businesses often report ARPA, average revenue per account, because one paying account can have many seats. The formula is the same with accounts as the denominator.

Which users and which revenue

The formula is simple; the definitions behind it are where ARPU numbers go wrong. Before you compare two ARPU figures, check both choices.

Most product teams use active users in the period as the denominator, because people who signed up two years ago and never came back say nothing about this month's business.

How to calculate ARPU: a worked example

Take one month for a subscription app (example numbers):

• 120,000 registered users in total, 40,000 active this month, 2,000 of them paying
• $50,000 billed, $2,000 refunded, $7,500 in app store fees (15% of the billed amount)
• Net revenue = 50,000 − 2,000 − 7,500 = $40,500

The same month gives very different "ARPU" depending on the definitions:

From $0.34 to $1.25 is almost four times, for the same business in the same month. The usual convention is the bold cell: gross revenue over active users. Whichever you pick, write it down next to the number.

The example also shows how ARPU breaks down: paying rate is 2,000 ÷ 40,000 = 5%, and 5% × $25.00 ARPPU = $1.25 ARPU. When ARPU moves, check which half moved. More people paying and payers spending more call for different actions.

ARPU vs ARPPU vs ARPA vs AOV

LTV is different again: it is the total revenue from one user over their whole lifetime, not in one period. Monthly ARPU multiplied by the expected number of months a user stays is a common rough LTV estimate.

How public companies report ARPU

Listed companies define ARPU in their filings, and the definitions show why you should always read the denominator. Spotify's Form 6-K for the first quarter of 2025 defines Premium ARPU as Premium subscription revenue recognized in the quarter, divided by the average daily Premium subscribers in the quarter, then divided by three months. It reported €4.73 for the quarter, up from €4.55 a year earlier, and attributed the change mainly to price increases, partly offset by product and market mix.

Two things to notice: Spotify's denominator is paying subscribers only, so in analytics-tool terms its "ARPU" is closer to ARPPU; and it uses average subscribers across the quarter, not the count on the last day. Neither is wrong, but neither can be compared with an ARPU that divides by all active users.

ARPU in TapCub

TapCub calculates ARPU from orders, not from a goal property. The built-in definitions are:

• ARPU = paid order amount (GMV) ÷ active users in the period
• ARPPU = GMV ÷ buyers
• Paying rate = buyers ÷ active users

Amounts come from your purchase event, converted into the site's base currency at the rate on the order date. Refunds in the same period are reported separately and are not subtracted, so TapCub's ARPU is a gross figure. If you need net ARPU, subtract the refund amount shown next to it. The definitions are in the docs under Business goals & revenue.

ARPU is also a built-in measure in charts and dashboards and appears in the revenue stage of the AARRR report, where you can split it by channel, country or segment. On the acquisition report, the Payback / LTV tab draws cumulative revenue per user by channel: for each channel, how much an acquired user has paid by day 1, 7, 30 and so on. Each point only uses users acquired long enough ago to have reached that day, so new channels are not penalized for being young. Compare that curve with customer acquisition cost to see when a channel pays back.

How to increase ARPU

Each lever moves one half of ARPU = paying rate × ARPPU. Measure the half you are trying to move:

• Convert more free users to paying. Watch paying rate and the funnel from signup to first purchase.
• Price and package tiers. A higher tier for heavy users raises ARPPU; check that paying rate does not fall more than ARPPU rises.
• Expansion revenue. Add-ons, extra seats and upgrades raise revenue per payer. Track repeat purchase rate and upgrade events.
• Keep high-value users. Losing your best payers lowers ARPPU quickly. Watch retention for the paying segment, not just overall.
• Monetize non-payers. Ads or one-off purchases raise ARPU without changing ARPPU's denominator. Count that revenue separately.

Common mistakes

• Comparing ARPU with different denominators. Your monthly ARPU against a competitor's quarterly ARPU over paying subscribers says nothing.
• Reading ARPU without paying rate. The same ARPU can be many small payers or a few large ones.
• Mixing currencies or ignoring refunds. Convert to one currency and state whether refunds and fees are deducted.
• Averaging over a skewed base. A handful of very large customers can carry ARPU. Look at the median or split by segment.
• Treating ARPU as LTV. One period's revenue per user is not a lifetime value.

Related guides: Revenue Tracking with Events and SaaS Metrics.