Average Revenue Per User (ARPU)
The average revenue generated per active user in a given period.
Definition
ARPU = Total Revenue / Number of Active Users (for a given period). For subscription businesses, it reflects pricing efficiency and upsell success. ARPU can be calculated monthly (monthly ARPU) or annually. ARPU expansion - when revenue per user grows over time - is a strong signal of product-market fit and pricing power.
ARPU varies dramatically by business model: consumer social apps ($3-15/year), consumer SaaS ($5-30/month), SMB SaaS ($50-500/month), enterprise SaaS ($500-50,000/month). Increasing ARPU is often easier than acquiring new users.
Why it matters for founders
ARPU directly impacts your LTV, unit economics, and growth potential. Higher ARPU means you can afford higher acquisition costs, need fewer customers to break even, and generate more revenue from your existing base.
Example
Netflix increased ARPU from $9.80 in 2017 to $16.20 in 2023 through price increases, ad-supported tiers, and the password-sharing crackdown. This ARPU growth added billions in revenue without acquiring new subscribers.
How Foundra helps
Foundra's Pricing & Packaging card models different pricing tiers to maximize ARPU while maintaining competitive positioning.
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Related terms
Lifetime Value (LTV)
The total revenue a customer generates over their entire relationship with your business.
Monthly Recurring Revenue (MRR)
The predictable revenue your business generates every month from subscriptions.
Unit Economics
The revenue and costs associated with a single unit of your business (usually one customer).
Gross Merchandise Value (GMV)
The total value of goods or services sold through a marketplace in a given period.