ARPU (Average Revenue Per User)
Total revenue divided by total active users in a period — a key indicator of monetisation efficiency and pricing power.
What is ARPU?
ARPU (Average Revenue Per User) measures how much revenue a product generates per active user in a given period.
**ARPU = Total Revenue ÷ Total Active Users**
ARPU vs. ARPPU
| Metric | Denominator | Use case |
|---|---|---|
| ARPU | All active users | Overall monetisation health |
| ARPPU (per paying user) | Paying users only | Pricing and packaging decisions |
ARPPU removes non-paying users from the denominator — useful for freemium products where most users are free.
ARPU benchmarks (monthly, SaaS)
| Segment | Typical ARPU |
|---|---|
| Consumer apps | $1–$10 |
| SMB SaaS | $20–$200 |
| Mid-market SaaS | $200–$2,000 |
| Enterprise SaaS | $2,000+ |
How to increase ARPU
- Tiered pricing with higher-value plans
- Usage-based pricing that scales with value delivered
- Add-on features for power users
- Reduce free plan limits to accelerate upgrade
Free templates for ARPU
Frequently asked questions
Is high ARPU always better?
Not necessarily. Lower ARPU with very high volume (consumer apps) can generate more total revenue than high ARPU with small volume. What matters is ARPU relative to CAC — if ARPU is high but CAC is higher, the unit economics don't work.
How does ARPU relate to LTV?
LTV = ARPU × average customer lifetime. Increasing ARPU directly increases LTV without changing churn rate. It's one of the two main LTV levers — the other being reducing churn.
Apply ARPU to your real product data
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Related terms
Churn Rate
The percentage of customers or revenue lost in a given period — the primary indicator of whether a product retains the value it delivers.
LTV (Lifetime Value)
The total revenue a business expects to earn from a single customer over the entire duration of the relationship.
CAC (Customer Acquisition Cost)
The total cost to acquire one new customer — including sales, marketing, and any related overhead — divided by the number of new customers acquired in a period.