Example: If you earned $30,000 in a month from 300 active customers, your ARPU is $100.
Why Average Revenue Per User (ARPU) matters
ARPU shows how much each customer is worth to you right now. It is a simple way to see whether growth is coming from adding more customers or from earning more from each one.
It also feeds other key numbers. Customer lifetime value is built from ARPU, and changes in your pricing or plan mix show up in it quickly.
How to read it
There is no universal target. ARPU depends on your pricing and the kind of customers you attract, so compare it with your own history and with ARPU by plan.
A rising ARPU can mean successful upgrades and pricing, but it can also come from losing small customers while keeping large ones. Always read it next to churn and customer count.
How to improve it
- Encourage upgrades to higher plans with clear feature differences.
- Introduce add-ons, extra seats or usage-based options.
- Review pricing and packaging against the value customers get.
- Focus acquisition on customer types that choose higher plans.
Common mistakes
- Including one-time revenue in a recurring revenue calculation.
- Counting inactive or trial accounts in the customer number.
- Judging ARPU without looking at the spread between small and large customers.
- Comparing ARPU across periods of different length.
“What is my ARPU by plan this month, and how has it changed compared with the previous quarter?”
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