How to Calculate the Average Revenue Per Unit

By Motley Fool Staff – Updated Apr 30, 2025 at 5:01 PM

Key Points

Average revenue per unit (ARPU) is calculated by dividing total revenue by average number of subscribers.
Higher ARPU indicates better revenue generation efficiency per subscriber.
Investors can use ARPU to assess and compare profitability of similar companies.

Average revenue per unit (ARPU) is a metric used by companies that offer subscription-based products and services, such as mobile phone carriers and Internet service providers. This can be useful for several reasons, so if you follow any companies that rely on subscribers, here's what you should know about ARPU and how to calculate it.

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A business person calculating profit from revenue. — Image source: Getty Images.

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ARPU = Total revenue / Average subscribers

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Notice that in the formula, we use the term average subscribers, as the actual number of subscribers can change constantly. So to come up with an accurate calculation, companies need to calculate (or at least estimate) the average number of subscribers during the time period.

For example, let's say that a cable company generated $1 million in revenue last month, and that the average number of subscribers during the month was 50,000. Then, the ARPU could be calculated as:

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ARPU = $1,000,000 / 50,000 = $20 per subscriber

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For example, if a cable company generates $50 in monthly ARPU, and after implementing a promotional deal where customers can get two movie channels for the price of one, ARPU jumps to $60, the promotion might be considered a success.

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