What is Average revenue per user (ARPU)? Definition, Formula & Benchmarks

What is average revenue per user (arpu)?

ARPU is the average revenue you earn per user or account over a period, usually per month. It's a quick read on how much each customer is worth and whether pricing, packaging, and upsells are working. Rising ARPU means you're monetizing your base better, not just adding logos.

Formula

ARPU = Total Revenue in Period ÷ Number of Active Users in Period

Total Revenue in PeriodRecurring revenue generated during the period (often MRR)
Number of Active Users in PeriodAverage count of active users or accounts over the period

Worked example

$80,000 in monthly recurring revenue across 400 active accounts gives an ARPU of $200 per month.

Why it matters for fast-growing companies

ARPU shapes the entire unit-economics stack: higher ARPU gives you more room to spend on acquisition and shortens payback. Watch the trend, not just the number. Falling ARPU can signal discounting or a drift toward smaller customers, while rising ARPU often means expansion and upsells are landing.

Frequently asked questions

Is ARPU the same as ARPA?+

They're closely related. ARPU divides revenue by individual users; ARPA (average revenue per account) divides by accounts, which may each contain many seats. In B2B SaaS, ARPA is usually the more useful number because you sell to companies, not individual seats. Pick one definition and stay consistent.

Should ARPU use gross or net revenue?+

Use recurring revenue (typically MRR) and be explicit about whether you include one-time fees. Most SaaS teams calculate ARPU on recurring revenue only, so it reflects the durable, repeatable value of each account rather than being inflated by setup fees or one-off services.

Average revenue per user (ARPU)