What is ARPPU?
ARPPU (Average Revenue Per Paying User) measures the average revenue generated from users who have made at least one purchase. Unlike ARPU which includes non-payers, ARPPU focuses exclusively on paying customers, making it essential for IAP-driven monetization analysis.
ARPPU Formula
ARPPU = Total Revenue / Number of Paying Users
Why ARPPU Matters
ARPPU is critical because it:
- Measures monetization depth from paying users
- Helps evaluate IAP pricing strategy
- Identifies opportunities to increase spend
- Separates payer behavior from conversion issues
- Essential for whale analysis and segmentation
ARPPU Benchmarks by Category
| App Category | Monthly ARPPU | Top 10% Payers |
|---|---|---|
| Hyper-Casual | $3 - $8 | $15+ |
| Casual Puzzle | $10 - $25 | $50+ |
| Midcore Games | $30 - $70 | $200+ |
| Strategy/4X | $50 - $150 | $500+ |
| Social Casino | $40 - $120 | $400+ |
| Subscription Apps | $5 - $15 | $30+ |
ARPPU vs. ARPU
ARPU (Average Revenue Per User)
Includes ALL users (payers and non-payers). Lower number, but shows overall monetization efficiency.
ARPPU (Average Revenue Per Paying User)
Only paying users. Higher number, shows how well you monetize those who convert.
The Revenue Equation
ARPU = ARPPU × Payer Conversion Rate. If ARPU is low, the problem is either ARPPU (payers don't spend enough) or conversion (not enough users become payers).
Improving ARPPU
- Tiered pricing: Offer price points from $0.99 to $99.99
- Value bundles: Create compelling multi-item packages
- Limited offers: Time-sensitive deals drive urgency
- VIP programs: Reward and encourage big spenders
- Content depth: Give reasons for continued spending
- Personalization: Tailor offers to user behavior
Payer Segmentation
- Minnows: Small purchases ($1-10 lifetime)
- Dolphins: Moderate spenders ($10-100 lifetime)
- Whales: Heavy spenders ($100-1000 lifetime)
- Super Whales: Top spenders ($1000+ lifetime)
Top 1-2% of payers (whales) often drive 50%+ of revenue. Understanding and nurturing these users is critical.
Common Mistakes
- Conflating ARPPU with ARPU in analysis
- Not segmenting by payer tier
- Ignoring time dimension (first purchase vs. repeat)
- Over-focusing on whale revenue at expense of ecosystem