Business Metrics

What is ARPU?

Definition

Average Revenue Per User — the average monthly or annual revenue generated per subscriber, calculated by dividing total revenue by total subscribers.

Understanding ARPU

ARPU (Average Revenue Per User) helps subscription businesses understand their revenue efficiency. It is calculated as Total Revenue / Total Users for a given period. For example, if a service earns $100,000/month from 10,000 subscribers, the ARPU is $10/month.

ARPU can be increased through upselling, cross-selling, or price increases. Tracking ARPU over time reveals whether a business is becoming more or less efficient at monetizing its user base. For consumers, ARPU gives insight into what the 'typical' customer pays, which can help in negotiating better deals.

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