Average revenue per user (ARPU), sometimes known as average revenue per unit, is a measure used primarily by consumer communications, digital media, and networking companies, defined as the total revenue divided by the number of subscribers.
The term is used by companies that offer subscription services to clients for example, telephone carriers, Internet service providers, and hosts. It is a measure of the revenue generated by one customer phone, pager, etc., per unit time, typically per year or month. In mobile telephony, ARPU includes not only the revenues billed to the customer each month for usage but also the revenue generated from incoming calls, payable within the regulatory interconnection regime.
Digital media and social media companies, which often rely on advertising revenue generated by users with free accounts, pay particularly close attention to their ARPU. Variations in ARPU reflect changes in the companies' ability to generate revenue and heavily impact their stock prices.[1] That provides the company a granular view at a per user or unit basis and allows it to track revenue sources and growth. ARPU is also used in the video game industry for games that support microtransactions or are offered as games as a service, as similarly, the bulk of revenue in such games comes from a small percentage of the overall population.[2]
There is a trend[citation needed] by telecommunications and Internet companies and their suppliers to sell extra services to users and a lot of the promotion that is used by the companies talks of increased ARPU for the operators. It typically manifests[citation needed] in the form of value-added services such as entertainment being sold to customers especially in markets where the primary service offered to the customer, such as the telephony or Internet service, is sold at a commodity rate.