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Growth Metricsimportant

Average Revenue Per User (ARPU)

The average revenue generated per user or account over a specific period.

Formula
ARPU = Total Revenue / Number of Users
Example

With $50,000 monthly revenue and 1,000 users, ARPU = $50/month.

Good Range

Growing ARPU indicates improving monetization

Warning Range

Declining ARPU may indicate pricing pressure

Complete Definition

Average Revenue Per User (ARPU) measures how much revenue each user or account generates on average. It's a key metric for understanding revenue efficiency and pricing effectiveness.

How to Calculate

ARPU = Total Revenue / Number of Users (for a given period)

ARPU Variations

ARPU (Average Revenue Per User)

For consumer products with individual users

ARPA (Average Revenue Per Account)

For B2B with company accounts

ARPPU (Average Revenue Per Paying User)

Only counts paying users (excludes free tier)

Why ARPU Matters

- Indicates pricing effectiveness - Helps segment customers - Component of LTV calculation - Shows monetization efficiency - Guides pricing decisions

Increasing ARPU

- Add pricing tiers - Create premium features - Implement usage-based pricing - Bundle products - Reduce discounting - Target higher-value segments

ARPU by Business Type

- **Freemium SaaS**: $5-50/month - **SMB SaaS**: $50-500/month - **Mid-market SaaS**: $500-5,000/month - **Enterprise SaaS**: $5,000-100,000+/month

Used in:Financial ProjectionsUnit Economics

Related Terms

Monthly Recurring Revenue (MRR)
The predictable, recurring revenue generated each month from subscription customers.
Customer Lifetime Value (LTV/CLV)
The total revenue a business can expect from a single customer account throughout their relationship.

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