What is Average Revenue Per User?

Average Revenue Per User (ARPU) is a metric that measures the revenue generated per user or customer. It's widely used in subscription-based businesses and telecoms.

To calculate ARPU, divide total revenue by the number of users or customers. This can be done for different time periods, like monthly or annually.

ARPU helps businesses understand how much value each customer brings. A rising ARPU often indicates successful upselling or cross-selling efforts. It can also show that a company is attracting higher-value customers.

Sales teams use ARPU to set targets and strategies. They might focus on increasing ARPU through premium offerings or add-on services. It's also useful for comparing performance across different customer segments or products.

However, ARPU doesn't tell the whole story. It doesn't account for the costs of serving each customer. A high ARPU isn't always better if it comes with high costs.

Companies often track ARPU alongside other metrics like customer acquisition cost and churn rate. This gives a more complete picture of customer value and business health.