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$816

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13.87

vs previous period

Average Revenue Per User (ARPU)

Date created: Apr 28, 2018  •   Last updated: Feb 25, 2022

What is Average Revenue Per User?

Average Revenue Per User (ARPU) is a company's generated revenue that is averaged across all users and reported as a monthly or yearly value. ARPU is a top-level metric, that can easily be normalized and is often cited as a comparative measure between similar companies.

Alternate names: Average Revenue Per Unit, Average Revenue Per Subscriber

Average Revenue Per User Formula

ƒ Sum(Revenue) / Count(Users)

How to calculate Average Revenue Per User

Consider a B2C SaaS company has 1000 individual users and is generating $200,000 in revenue per month, Average Revenue per User would be; ARPU = $200,000 / 1,000 = $200 per user (monthly)

Start tracking your Average Revenue Per User data

Use Klipfolio PowerMetrics, our free analytics tool, to monitor your data. Choose one of the following available services to start tracking your Average Revenue Per User instantly.

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How to visualize Average Revenue Per User?

Use a summary chart to visualize your Average Revenue Per User data and compare the current value to a previous time period.

Average Revenue Per User visualization example

klipfolio image

Average Revenue Per User

$816

arrow-right icon

13.87

vs previous period

Summary Chart

Here's an example of how to visualize your current Average Revenue Per User data in comparison to a previous time period or date range.
arrow-right icon
arrow-right icon

Average Revenue Per User

$816.03

arrow-right icon

13.87

vs previous period

Summary Chart

Here's an example of how to visualize your current Average Revenue Per User data in comparison to a previous time period or date range.

More about Average Revenue Per User

Average Revenue per User is a core metric for determining customer value to the organization and developing an understanding of customer behavior. Use it to determine behavior-based customer segments (best/growth/rest) and then develop segment-specific strategies – to recognize and appreciate best customers, grow the middle, and minimize effort and investment on the low-value customers. When tracking ARPU, it is helpful to group customers into key behavior-based segments, such as quartiles or deciles, based on their average (annual) spend, then determine your best, growth opportunity, and least valuable customers.

Note that ARPU describes the average revenue for all users - paying or not. This is particularly relevant to companies with a freemium model. Whereas, Average Revenue Per Paying User only includes paying users. When combined with Costs to Acquire a User or expressed as Margin Per User, ARPU paints a clear picture of the unit economics and the viability of a business or product line. This metric is used as an indication of revenue generation capability and the ability to meet targets. It is an indicator for margin growth.

The ARPU trend over time gives a perspective on how the business is either improving or worsening. Most industries are looking for an increase in the ARPU over time. Changes in ARPU can be a reflection of changes in prices, expansion or contraction within accounts, or even changes in initial purchases.