What is ARPU (average revenue per user)?
How is ARPU calculated?
ARPU divides recurring revenue by the number of active users or accounts. For a monthly figure, you take monthly recurring revenue and divide by the active accounts that month. Say a business has 2,000 in MRR spread across 40 accounts: ARPU is 2,000 ÷ 40 = 50 per account per month. Because it is an average, one very large customer can pull the figure up, which is why teams often look at ARPU by segment as well as overall.
What does ARPU tell you?
ARPU turns the whole base into a single comparable number. Rising ARPU usually means customers are moving to higher tiers or buying add-ons, while falling ARPU can signal heavy discounting or growth concentrated in a cheaper segment. Read on its own it can mislead, since an average hides the spread, but tracked over time and split by plan it shows whether pricing and packaging are pulling revenue in the direction you intend.
How does ARPU connect to lifetime value?
ARPU is one of the inputs to customer lifetime value. If you know the average revenue a customer brings each month and how long customers typically stay, you can estimate the total value of a customer over their life. That makes ARPU a useful building block: it captures the per-period revenue that lifetime value then extends across the whole relationship.
Reading ARPU from an export
ARPU is usually calculated from a subscriptions export that lists active accounts and their recurring revenue, such as a CSV from Stripe. Rather than divide totals by counts in a spreadsheet, you can open the file and ask for average revenue per account in plain English. Paperswift computes it in your browser, and only your column names and their types are sent when you ask, never the values in your rows.
Frequently asked questions
How is ARPU calculated?+
Divide the recurring revenue for a period by the number of active users or accounts in that same period. For a monthly figure, take monthly recurring revenue and divide by active accounts at month end. Be consistent about whether you count users or paying accounts, because mixing the two between periods makes the trend meaningless.
Is ARPU based on users or accounts?+
Either, as long as you are consistent. Consumer products often measure per user, since each person pays. Business products usually measure per account, because one account can hold many users on a single subscription. What matters is picking one definition and keeping it stable, so changes in ARPU reflect pricing and mix rather than a shifting denominator.
How does ARPU relate to MRR?+
They are directly linked. Monthly ARPU is monthly recurring revenue divided by active accounts, so ARPU multiplied by the account count returns MRR. Watching them together separates two causes of growth: more customers raises MRR while holding ARPU steady, whereas upsells raise ARPU even if the customer count stays flat.
Why did my ARPU change without a price rise?+
ARPU moves with customer mix, not just list prices. If more customers land on higher tiers, or low-paying accounts churn, ARPU rises even though no price changed. The reverse happens when a discounted segment grows quickly. This is why ARPU is best read alongside the underlying counts rather than on its own.
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Start free todayLast updated · by Stefan