Ride-sharing companies like Uber and Lyft typically see ARPU of about $35/month. This includes riders who use it weekly and those who open the app once a month. At $250/month ARPU, you can build a solid revenue engine — if you keep churn low. If you’re in SaaS, and not sure whether to go SMB or enterprise, mid-market may be your fastest route to scale. They churn less than SMBs but don’t require the heavy procurement dance of big enterprise. Broadcast live metrics like Average Revenue Per User (ARPU) to your team, with an easy-to-understand dashboard.
The total revenue generated during the standard period is then divided by the number of units or users. While ARPU measures revenue generation per user, CAC focuses on the cost incurred to acquire each new customer. If your customer acquisition cost is higher than your ARPU, you’re losing money on each customer acquisition. In today’s world, ARPU tells us more than just how much each customer is worth. It shows us if the business model is working, how sticky users are, and how much value each industry pulls from its base.
Each metric serves a specific purpose, helping companies identify opportunities and challenges that ARPU alone might miss. That’s where AMPU comes in—it looks at the margin (or profit) generated per user. This is crucial for businesses looking to balance growth with profitability. While the formula is straightforward, getting the inputs right can be tricky.
Instagram Marketing
That’s why it’s essential for SaaS companies to get to grips with and measure it accurately. Ashley Kemper leads the Revenue Marketing team at PandaDoc. She has worked in marketing for more than 12 years, building marketing teams at Asana, and launching new brands at Double and HyperComply. Before venturing into marketing, Ashley worked in content and publishing at National Geographic, Agence France-Presse, and Government Executive magazine. With PandaDoc CPQ software, you can make the quoting process seamless.
Example of ARPU
- With PandaDoc CPQ software, you can make the quoting process seamless.
- It’s not just about tracking revenue—it’s about using that insight to refine strategies, improve customer experiences, and drive sustainable growth.
- It might seem like a no-brainer, but giving your customers top-notch service—plus an intuitive user experience—will increase retention and encourage your customers to spend more.
- Ashley Kemper leads the Revenue Marketing team at PandaDoc.
Marketing automation platforms — like HubSpot, Marketo, or ActiveCampaign — generate about $1,500/month per customer in ARPU. This includes access to email marketing, CRM, analytics, and sometimes content tools. Platforms boost ARPU by bundling services (like Disney+, Hulu, and ESPN+), adding premium tiers (4K, multiple screens), or upselling newer content.
How to calculate average revenue per user
In this sense, adopting/including additional metrics that fit under the ARPU umbrella is advised for more specific insights. In short, it’s the average amount of revenue generated by each active user of your app over a given period of time. Average revenue per user, or unit, is a metric used by app businesses to calculate how much money they generate from a user during a specific, set time period.
- The real secret sauce to understanding your customer is being able to understand your Average Revenue Per User (ARPU).
- Users should be informed well in advance, provided with transparent pricing details, and given insights into the decision-making process.
- ARPU is beneficial because it helps you better understand customer value, which allows you to refine your pricing strategies and evaluate your overall performance.
- It’s essential to have these expansion strategies in place to cater to this market.
To calculate ARPU, you’ll need to divide the total revenue by the number of active users (monthly or daily). While ARPU measures revenue generation, MAU and DAU reflect the level of user engagement and activity on your platform. For a sustainable ARPU, balance user growth with revenue growth. Average revenue per user (ARPU) is a financial metric that gauges the average income generated from each user or customer over a specific period. Both metrics are crucial for making business decisions, with ARPU offering insights into short-term performance and LTV guiding long-term strategic planning.
Enterprise: Big money, long cycles
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By combining these strategies, businesses can grow their ARPU sustainably while improving customer satisfaction. The key is to focus on delivering value rather than just extracting revenue. After all, a happy customer is more likely to stay loyal—and loyal customers are the foundation of any successful business. The more engaged your customers are, the more likely they are to stick around and spend more. Gamification, personalized offers, and loyalty programs can keep users invested in your product or service, increasing their overall contribution to your revenue. It’s not just about tracking revenue—it’s about using that insight to refine strategies, improve customer experiences, and drive sustainable growth.
Sales Prospecting
CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path. Most solutions are sold as annual contracts with support baked in. Companies are willing to pay a premium to prevent reputational damage, downtime, or regulatory fines. So the more your platform supports smooth transactions — financing, tracking, insurance, procurement tools — the higher the ARPU climbs.
This evolution provides loyal, long-term customers with an integrated value-add that supports their business growth, eliminating the need for separate systems for other growth functions. This strategic move has significantly boosted HubSpot’s ARPU among customers seeking the enhanced value offered by the wider platform. ARPU is important for marketers, product managers and executives. While our data shows correlation and not causation, there are many reasons why high ARPU customers retain better than low ARPU customers. Since they pay more each month, they likely have a greater need for the service you offer and find more value in your service than low ARPU customers. High ARPU customers may also be large customers with annual contracts.
With ARPU in your toolkit, you’re better equipped to grow sustainably and strategically. Therefore, the average revenue per hour for this month is $10. This means that, on average, each user generates $10 in revenue for the company during that month.
Offering incentives, loyalty rewards, and customized pricing can make premium customers more likely to invest in additional services. Segment your customer base to see the higher-value users and create targeted campaigns designed to encourage more spending. It might seem like a no-brainer, but giving your customers top-notch service—plus an intuitive user experience—will increase retention and encourage your customers to spend more. ARPU is beneficial because it helps you better understand customer value, which allows you to refine your pricing strategies and evaluate your overall performance. It’s essential to have these expansion strategies in place to cater to this market.
ARPU is especially important for industries like telecommunications, streaming services, and SaaS companies, where recurring revenue is the norm. By tracking ARPU, businesses can pinpoint growth opportunities, fine-tune average revenue per user pricing strategies, and deliver more value to their users. Average Revenue Per User (ARPU) is a key performance indicator that calculates the revenue earned from each user or customer on average.
Typically, an increasing or high ARPU signifies effective monetisation of your user base, often attributed to successful marketing campaigns or valuable product offerings. Conversely, a decreasing or low ARPU can raise concerns, indicating potential customer dissatisfaction, sub-optimal pricing strategies, or the necessity to reassess your approach to marketing. ARPU, an acronym for average revenue per user, is a crucial metric that reveals the average revenue generated by each active user of your SaaS application over a specific period of time. Yes, ARPU can be applicable to non-subscription businesses as well.