What is Average Revenue Per User (ARPU)?
Average Revenue per User (ARPU) is the total annual revenue that is generated by a company’s users, divided by the number of users.
It is an important metric for retailers because it measures how well they are converting visitors into customers.
ARPU can be calculated by dividing annual revenue by the number of active subscribers or average monthly user spend multiplied by 12.
This metric measures how many dollars each individual user spends per year on average (i.e., ARPU = Annual Revenue / Number of Active Subscribers).
Some companies count inactive members as well, but others only count active members in their ARPU calculation.
There are different ways to calculate ARPU, and the industry standard is to divide a company’s annual revenue by its active subscribers.
However, companies may also define “active subscriber” differently: There may be differences in what types of members or orders they include in their calculation and whether or not they include inactive members.
Therefore, it’s important to note that each company calculates ARPU differently, and it’s crucial to check the specific details of their calculations.