ARPU (Average Revenue Per User)
The average monthly or annual revenue generated per user or account. ARPU helps you understand pricing efficiency and segment customers by value.
What Is ARPU?
ARPU (Average Revenue Per User) is the average revenue generated per user or account over a given period — typically monthly or annually. It is calculated by dividing total revenue by total active users. ARPU helps you understand pricing effectiveness and is a key input to customer lifetime value (LTV) calculations.
How to Calculate ARPU
ARPU = Total Revenue / Total Active Users
For SaaS businesses, use MRR divided by active subscribers for monthly ARPU, or ARR divided by subscribers for annual ARPU. Be consistent about what counts as a "user" — some companies measure per account, others per seat.
Why ARPU Matters for SaaS Growth
ARPU directly impacts unit economics, LTV, and ultimately your ability to sustain profitable growth. Increasing ARPU through upselling, pricing optimization, or moving upmarket is often more efficient than acquiring new customers. A rising ARPU trend signals pricing power and successful product expansion.
