Average Revenue Per User

Average Revenue Per User measures the mean revenue generated per user or account over a specific time period, typically monthly or annually. This fundamental metric helps product managers understand monetization effectiveness, compare performance across segments, and evaluate pricing strategy impact. ARPU is calculated by dividing total revenue by the number of active users during the period. For B2B products, it's often called Average Revenue Per Account. The metric provides a normalized view of revenue generation independent of absolute user counts, enabling meaningful comparisons over time and across cohorts. Strategic applications include comparing monetization across user segments, evaluating pricing and packaging changes, assessing upsell and cross-sell effectiveness, forecasting revenue based on user acquisition, identifying expansion opportunities, and benchmarking against competitors. Product managers track ARPU trends to understand whether value capture keeps pace with value delivery. Rising ARPU may indicate successful expansion revenue, improved packaging, or targeting higher-value customers. Declining ARPU could signal competitive pricing pressure, feature commoditization, or shifting customer mix toward lower tiers. Analyzing ARPU alongside customer acquisition cost and lifetime value provides complete monetization picture. Segmented ARPU helps identify most valuable customer profiles.