Average Revenue Per User (ARPU)

Average revenue per user (ARPU) helps you understand how much revenue each of your active subscribers brings in. It’s a straightforward metric for evaluating your business’s performance.

What is Average Revenue Per User (ARPU)?

ARPU is the average amount of revenue your business earns from each active subscriber over a specific period. It’s calculated by dividing the total revenue from all active subscribers by the number of active subscribers. Here’s the formula:

ARPU = Total Revenue from Active subscribers / Number of Active subscribers

ARPU serves to normalize revenue across different plans and usage levels, giving you a clear, average value per user regardless of the variety of subscriptions or usage patterns in your customer base.

Why is ARPU important?

ARPU matters because it shows you how much value each customer brings to your business. Here’s why it’s important:

• Revenue insight: ARPU helps you see how well your pricing and services are working.
• Customer value: It gives you an idea of the average revenue per user.
• Better decisions: Knowing your ARPU helps you make smarter choices about marketing, pricing, and keeping customers.
• Performance check: Comparing ARPU over time or against industry standards shows how your business is doing.

Actions you can take with ARPU insights

• Adjust pricing: Use ARPU data to evaluate and tweak your pricing to get the most revenue per user.
• Improve services: Find ways to offer more or better services that can increase the revenue per user.
• Focus on valuable customers: Pay attention to high-value customers and work on keeping them happy.
• Boost retention: Implement strategies to keep customers subscribed longer, like loyalty programs or better customer support.

By understanding and regularly checking your ARPU, you can get a clear picture of your business’s revenue. This metric helps you make informed decisions that drive growth and increase the value each customer brings, ensuring long-term success.