FAQ: Common Metrics - ARPU 2

This community-built FAQ covers the “ARPU 2” exercise from the lesson “Common Metrics”.

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This exercise can be found in the following Codecademy content:

SQL: Analyzing Business Metrics

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This topic states: “ARPU increases if more players are choosing to purchase, even if the purchase size stays consistent.”

However, I disagree with this logic.

Here’s why:

Let’s say that on day 1 there are:

  • 50 purchasing users who all make $10 purchases
  • 50 non-purchasing users

ARPU = $500 / 100
= $5

Therefore, ARPU for day 1 is $5/user

Now, let’s say on day 2 there is:

  • 100 purchasing users that all make $10 purchases
  • 100 non-purchasing users

ARPU = $1000 / 100
= $5

Therefore ARPU for day 2 is also $5/user

My point being: The amount of purchasing users doubled from day 1 to day 2 … BUT the amount of non-purchasing users ALSO doubled … there is 50 more purchasing users on day 2 than on day 1 … yet the number of non-purchasing users offsets the ARPU calculation if they increase at the same day-to-day rate that the purchasing users doSo THEREFORE ARPU does not NECESSARILY increase if the number of purchasing users increases and the purchasing size stays consistent.

Would love it if anyone had any insights.