ARPU
Average Revenue Per User
ARPU (Average Revenue Per User) measures the average monthly or annual revenue generated per active user or account. It's a key indicator of monetization efficiency and pricing power. Rising ARPU with stable customers = healthy expansion; falling ARPU = pricing or product problems.
A SaaS company has 1,000 paying accounts generating $150,000 MRR. Monthly ARPU = $150,000 / 1,000 = $150/account. If next quarter ARPU grows to $165 while customer count stays flat, that's $15,000 additional MRR from expansion alone.
ARPU is deceptively simple but reveals deep truths about your business. Rising ARPU means you're either successfully upselling existing customers or attracting larger accounts — both good. Falling ARPU means you're either discounting too much, losing enterprise deals to competitors, or your product is becoming commoditized. The trick is watching ARPU by cohort: new customer ARPU vs. existing customer ARPU tell very different stories. If new customer ARPU is declining, your positioning or market is shifting. If existing customer ARPU is growing, your expansion motion is working. Track both.
Define ItOther Definitions
“ARPU represents the average amount of revenue generated per user over a specific time period, typically calculated monthly (monthly ARPU) or annually (ARPA).”
“Average Revenue Per User calculates how much revenue each of your customers generates on average. It's a critical metric for understanding monetization efficiency and tracking pricing strategy effectiveness.”
“ARPU measures the average revenue per user while ARPA (Average Revenue Per Account) measures revenue per paying account. The distinction matters when accounts can have multiple users.”
ARPU calculates the average revenue contribution per user or customer over a defined period. The formula is straightforward — total revenue divided by active users — but the insights require segmentation. B2B SaaS companies often prefer ARPA (per account) since multiple users typically belong to one paying account. ARPU trends reveal monetization health: consistent growth suggests successful upselling, value delivery, and pricing power. Decline signals competitive pressure, excessive discounting, or product commoditization. ARPU is most useful when tracked by customer segment, acquisition cohort, or plan tier to identify which segments drive growth and which drag it down.
MistakesCommon Mistakes
Confusing ARPU (per user) with ARPA (per account) — B2B SaaS should usually track ARPA
Not segmenting ARPU by customer cohort, plan tier, or acquisition source
Ignoring ARPU trends — a declining ARPU trend often precedes revenue problems
Using ARPU to compare companies without adjusting for contract length or billing frequency
Not distinguishing new customer ARPU from existing customer ARPU
ARPU trending down? That's a pricing or expansion problem.
We analyze your ARPU by segment to find where monetization is leaking — and build the upsell and cross-sell motions to fix it.
Experience across
