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Glossary of Mobile Advertising Terms

ARPU (Average Revenue Per User)

What is ARPU (Average Revenue Per User)?

ARPU is the abbreviation for average revenue per user (sometimes it can also mean average revenue per unit). It is used to measure the income generated by customers (users) or basically, it’s a measurement for profit. It’s generally used in companies that offer some sort of subscriptions to their customers, so it’s most relevant in the telecommunications sector (i.e. cable companies, internet providers and such).

How is ARPU calculated?

ARPU is calculated by dividing the total revenue with a number of subscribers. To be more precise, a period of time must be defined, so to calculate ARPU on a monthly basis, a monthly recurring revenue is divided by a total number of subscribers.

Depending on set objectives, ARPU can also be calculated by using various factors like user age, occupation, geographical location and so on. The measure is very useful to management and analysts, although the issue with it, is that it doesn’t provide detailed information about a user base, so in some cases, the real ARPU figure might not be accurate. Sometimes people confuse ARPU with AMPU (which stands for average margin per user). While they have similarities, they have different uses and are calculated differently, and essentially they are not the same thing.