What is Average Revenue per Paying User ?
The estimated revenue that one paying user generates during a specific period. In most cases, "paying" users are those who subscribe to, pay for, or make in-app purchases to utilize a service. In gaming apps, this measure is most typically used to identify loyal customers willing to pay for the app. ARPPU removes users that don’t actively spend money on the app. ARPPU is equal to the sum of all revenue and the number of paying customers. According to this definition, ARRPU is a further extension of average revenue per user (ARPU). Analysts sometimes prefer it because it solely includes paying consumers in their calculations.
Companies rarely report on ARPPU, which is utilized less frequently than ARPU; hence it is less useful. Financial modeling and forecasting can be used to make revenue estimates using ARPPU, or they can be employed to determine an organization’s profitability and capacity for revenue creation by trending the ARPPU.ARPU, or average revenue per paying user, is an alternative non-GAAP statistic to ARR (ARPU).
The primary distinction between ARPPU and ARPU is that the former only consider customers who purchase. The ARPPU measure is useful in financial modeling, forecasting, and profitability analysis because it divides total revenue by the average number of paying users. It could be an important measure for an internet company with many free and paying customers. The correct ARPPU must be determined if your business strategy is to work. Use Putler, which can quickly calculate the best ARPPU for your company. ARPPU is only one of the many useful subscription metrics you’ll receive. You’ll also get comprehensive sales, product, customer, and visitor statistics and analytics.
If your ARPU is low, then support, infrastructure, and scaling concerns will affect you more quickly and more severely than they otherwise would. It will be tough for you to remain in business. Customers are more likely to continue with a lower-priced plan if it has the bulk of useful features. If this is the case, your ARPPU will be severely impacted because you will have no consumers on the more expensive plans. Each month, ARPPU calculates how loyal each user is, and those who are more loyal pay you more. The greater the ARPPU, the more money you can make from your current consumers. And when you can get an ARPPU (average revenue per customer unit) that’s higher than average, you know your product is producing an improved value ratio.