ARPU (Average Revenue Per User)
The average monthly revenue generated per active user or account.
What it means
Average Revenue Per User divides your total recurring revenue by the number of active accounts. It's a simple but powerful metric that reveals your pricing power and customer mix. A rising ARPU means customers are upgrading, you're attracting bigger accounts, or your pricing strategy is working. A declining ARPU can signal discounting pressure or an influx of lower-tier plans.
Formula
ARPU = MRR ÷ Total active accounts
Why it matters
ARPU directly influences LTV and payback period. Increasing ARPU by 20% through better pricing or upselling has the same revenue impact as acquiring 20% more customers - but at near-zero cost. It's one of the easiest levers to pull for bootstrapped founders.
What is ARPU?
ARPU stands for Average Revenue Per User. It's the average monthly revenue each active account generates, calculated by dividing MRR by total active accounts.
How do you increase ARPU?
Raise prices for new customers, introduce higher tiers, add premium features or add-ons, and create content that showcases the value of upgrading.
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