Value Metric
Average Revenue Per User (ARPU)
Average Revenue Per User (ARPU) is the average revenue generated per user or account over a given period.
What is Average Revenue Per User (ARPU)?
Average Revenue Per User divides total revenue in a period by the number of users (or accounts, when it is called ARPA). It is a simple but powerful lens on monetization: it shows how much value, on average, you extract from each relationship, independent of how many customers you have.
ARPU is a building block for lifetime value and a quick way to see the impact of pricing, packaging, and expansion changes.
How to calculate it
ARPU = Total Revenue ÷ Number of Users
- Total Revenue
- Total revenue in the period
- Number of Users
- Active users or accounts in the same period
Worked example
If you earned $500,000 in a month from 10,000 users, ARPU = $500,000 ÷ 10,000 = $50 per user.
What good looks like
- Trend over absoluteRising is good
ARPU varies too widely across markets for a universal target — the signal to watch is a steadily rising ARPU alongside stable or growing retention.
Why it matters
ARPU is the monetization half of growth. Two companies with identical user counts can have very different revenue depending on ARPU, and small increases compound across the whole base. Rising ARPU with steady retention is a sign of healthy pricing power; rising ARPU with rising churn may mean you are pricing out your users.
How to improve Average Revenue Per User (ARPU)
Test pricing and packaging
Experiment with tiers, usage-based components, and plan structure to capture more of the value you deliver.
Grow expansion revenue
Add upsell and cross-sell paths so existing users naturally spend more over time.
Frequently asked questions
What is the difference between ARPU and ARPA?
ARPU is average revenue per individual user; ARPA is average revenue per account (which may contain many users). B2B companies usually track ARPA because they sell to organizations, while consumer products track ARPU.
How is ARPU used to calculate LTV?
Lifetime value is commonly estimated as ARPU × gross margin × average customer lifespan. So ARPU is a direct input — raising it (without hurting retention) lifts LTV proportionally.