What is ARPU (Average Revenue Per User)?
Average Revenue Per User (ARPU) measures how much revenue each active customer generates within a given time period (typically monthly or annually). Unlike AOV which measures per-transaction value, ARPU captures total per-customer value including repeat purchases.
Why It Matters
ARPU bridges the gap between AOV (per-transaction) and LTV (lifetime). It tells you how much revenue your average customer generates per month or quarter, making it useful for financial forecasting and benchmarking.
How to Calculate It
ARPU = Total Revenue in Period ÷ Number of Active Customers in Period
ARPU vs. AOV vs. LTV
| Metric | Measures | Time Horizon |
|---|---|---|
| AOV | Per-transaction value | Single order |
| ARPU | Per-customer periodic value | Month/Quarter |
| LTV | Per-customer total value | Full lifetime |
Increasing ARPU
- Drive repeat purchase frequency
- Increase average order value
- Introduce premium tiers or subscription upgrades
- Implement cross-sell and upsell programs