The total revenue of your entire player base and lifetime value of your top customers can shed light on many different aspects of your game’s financial health. However, when it comes to understanding user behavior, ARPU stands out as one of the most important metrics for app developers.
In today’s digital landscape, where in-app purchases have become commonplace, user experience is a critical factor that can make or break the success of a game. As such, maintaining a healthy ARPU is essential for any app business, especially in the highly competitive world of Web3 gaming.
By knowing how much revenue the average user brings into your company, you can pursue your game development journey with actionable insights and make data-driven decisions. So, with that being said, let’s dive into what ARPU is and how you can optimize it for your Web3 game.
How To Calculate Average Revenue Per User
The easiest way to calculate ARPU for your Web3 game is to take the total number of users who made a purchase within a given time period and divide it by the total revenue generated in that same time period. This will give you an average amount of money each user is spending on your game.
For example, if 100 players purchased in-game items for a total of $1000 in the month of February, then your ARPU would be $10. This means that on average, each player spent $10 on your game in that month. Now, keep in mind that a single user can generate substantial less revenue than your top players, but the average revenue per user still provides valuable insights on your overall player base.
The Following Formula Can Be Used To Calculate ARPU:
ARPU = Total Revenue / Total Number of Paying Users
This is one of the most important monetization metrics but it can be difficult to collect accurate data that present actionable insights. Ideally, the more total data points you have, the more accurate your ARPU calculations will be. However, for many Web3 games that are still in development or early stages of launch, it can be challenging to gather a significant amount of data.
If you’re a Web3 game developer and would like to learn more about how this KPI can be analyzed alongside other revenue metrics, feel free to contact us here at Helika. As the leading Web3 game analytics company, we understand how virtual assets with tangible value have changed the way we view gaming and how ARPU plays a crucial role in shaping your game’s success.
Use Cases of ARPU For Your Gaming App
To better understand how ARPU can be used to practically improve your gaming app, let’s take a look at a hypothetical example. Imagine you have an in-app store where users can purchase virtual currency to unlock special features and items within the game. By tracking ARPU, you can see how much revenue is being generated from these purchases on average per user.
If you notice that your ARPU has increased, it could indicate that players are spending more in your game and engaging with the in-app store. This allows you to focus on creating more appealing and valuable content for the in-app store, as it seems to be resonating with your player base.
On the other hand, if you see a decrease in ARPU, it could signal that players are losing interest or not finding value in your in-app store offerings. This can prompt you to evaluate and improve the content and pricing of your virtual items to better align with player preferences. With this data, it can prompt your product team to ask questions that get to the root of the issue, such as: Are players not finding enough value in our virtual items? Is the pricing too high? etc.
How Web3 Game Analytics Can Help
Now that we’ve gone over the basics of this financial metric, let’s explore how analytics provided by Helika is the key to unlocking market trends that can increase your ARPU. Remember, just having the number or data set isn’t enough to fully understand what actions need to be taken. It’s important to have an in-depth understanding of the data and how it relates to your game as a whole.
Pricing Models For Better Financial Performance
A higher ARPU is a metric that many Web3 game companies should strive for. With a tokenized in-game economy, your game’s financial lifeblood depends on player engagement and spending.
As such, it’s essential to explore different pricing models to better understand how each can affect your ARPU. Some companies might choose to keep the game free-to-play or adopt a subscription-based model, while others may opt for a one-time purchase or in-app purchases.
Regardless of the pricing model you choose, it’s crucial to have a solid understanding of your target audience and their spending behavior to optimize your ARPU. That’s where in-game analytics provided by Helika comes into play. With a better understanding of your ARPU, a/b split tests can be conducted to test different pricing models and determine what works best for your game.
Data-Driven Decisions For Your Marketing Efforts
If for example, your ARPU was already higher than the industry standard, a ‘green light’ sort of speak in terms of marketing decisions could be given. Knowing this metric would allow you to allocate more resources towards user acquisition and advertising campaigns while still ensuring a healthy return on investment (ROI).
On the other hand, if your ARPU is lower than expected, Helika’s analytics can help pinpoint areas for improvement and inform your marketing strategy. For instance, if the data shows that a certain demographic has a lower ARPU, you may want to target them with specific promotions or features to increase their spending. Either that or avoid targeting them altogether and focus on demographics with higher ARPU potential.
With that being said, a customer base with more money to spend isn’t the only thing marketers should focus on. As Web3 gaming develops, a healthy network effect with free users can be a key driver that makes large spenders want to stay for longer periods. Who wants to pay for in-game assets if there’s no one else to play with?
By analyzing data on player retention and engagement, Helika can provide valuable insights to help game developers improve their customer loyalty and community building efforts. As you can see, a holistic approach is still needed, even when focusing on a crucial metric such as ARPU. Helika is specialized in Web3 gaming analytics and can process the entire bigger picture ecosystem for our clients.
Premium Features For The Engaged User
If ARPU coincides with a pattern of daily active users, it is an indication that users are actively engaged with the game and likely to continue spending money. This information can be used to prioritize updates and features that cater to this group of highly engaged users, as they have a higher potential for generating revenue.
For example, a daily quest can help maintain daily active users and if this metric correlates with a higher ARPU, game development efforts in this department may be prioritized. Additionally, retention rates can also provide valuable insights into the success of events or promotions geared towards retaining users and increasing their spending.
When combined with other key metrics, ARPU can be optimized with personalized strategies for specific user groups, such as high spenders or free users. By understanding the correlation between ARPU and other metrics, game developers can implement more efficient monetization strategies to maximize revenue without compromising retention rates.
Final Thoughts
Having a better understanding of your user base is crucial for your business model, no matter what type of Web3 game you’re building. A good ARPU can be influenced by many factors from a consistent flow of new users to an exceptional conversion rate, and working with a data analytics company in Helika is the key to unlocking the full potential of your game.
Remember, using metrics like ARPU can guide strategic decision-making and provide valuable insights into user behavior, ultimately contributing to the overall success of your Web3 game. So, feel free to contact us to learn more about how we can help you optimize ARPU and other key metrics for your game. Let’s build a thriving Web3 gaming industry together!
