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Average revenue per user (ARPU / ARPA)

Definition

Average revenue per user (ARPA) or Average revenue per account (ARPU) is the average amount of money a company makes per user on a monthly or yearly basis. It is calculated by taking the total revenue of a company and dividing it by the number of users that pay for services.

As a business owner, you’re always looking for ways to increase your revenue. ARPA is a measure of the average revenue generated per user of your product or service. It’s a helpful way to track growth and determine whether your business is scaling effectively.

How is Average revenue per user (ARPU / ARPA) calculated?

To calculate ARPU, simply divide your total revenue by the number of users you have.

The formula for calculating Average revenue per user (ARPU / ARPA) is:

Total Revenue / Number of Active Accounts = ARPA

For example, if your SaaS company makes $1 million in revenue in one year and you have 1,000 businesses using your software, your ARPU is $1,000.

There are a few things to keep in mind when calculating ARPA. First, make sure you’re using consistent units. If you’re tracking monthly ARPA, make sure your revenue and user counts are also for the month.

Second, you can choose to measure ARPA in different timeframes. For example, you could track daily, weekly, or monthly ARPA. The timeframe you choose will depend on your business and what makes sense for you.

Third, be sure to include all revenue in your calculation. This means revenue from all sources, such as advertising, subscriptions, and product sales.

Fourth, you can segment your users in different ways to get more insight into your ARPA. For example, you could segment by paying and non-paying users, or by different product tiers.

Finally, keep in mind that ARPA is just one metric to track. It’s important to look at ARPA in conjunction with other measures, such as churn rate and lifetime value, to get a complete picture of your business.

Why is Average revenue per user (ARPU / ARPA) important to measure?

ARPA is important to understand because it gives an indication of how much each user is worth to a company, which can be used to determine if a product or service has potential for growth and expansion.

Frequently asked questions

Have another question? Reach out to our retention expert team.

Is ARPA monthly?
AnsARPA can be measured across any period of time depending on your business model. It is most commonly used on a monthly basis but it can also be used on a daily,weekly,quarterly or annually basis.wer
What is ARPA and ARPU?

ARPA is the average revenue generated per account, ARPU is the average revenue generated per user.

  • ARPA = Sum of revenue/ The total number of accounts
  • ARPU = Sum of revenue/ The total number of users.
What are some ways to increase ARPA / ARPU?
Some ways to increase ARPA include increasing prices, adding features to justify a higher price, acquiring high-value customers, and reducing churn.
What is a good ARPA / ARPU?
There is no one-size-fits-all answer to this question. ARPA will vary depending on your business, your industry, and your pricing model.
How often should you calculate ARPA / ARPU?
You can calculate ARPA as often as you like, but most businesses choose to track it on a monthly basis.

Related terms

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