Commerce Glossary

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What is Average Revenue Per User (ARPU)?

av - er - age rev - e - nue per user
noun
Is one of the most important revenue metrics for SaaS business and subscription businesses and represents the average revenue amount that a merchant receives per user for a certain period of time, monthly being the standard. This metric allows merchants to analyze their company’s revenue generation and user growth. Subscription service businesses use this metric to calculate the revenue generated by one user per unit time. ARPU offers merchants an overall view of customers base segment and provides important insights about what to improve in the business’s future.
How to calculate ARPU?

To calculate the ARPU for a month, take your total MRR (Monthly Recurring Revenue) and divide it by the number of active customers. It’s recommended to track ARPA by customer segments or cohorts – for example, for new and existing customers separately – in order to understand better what measures you need to take if the ARPA fluctuates.

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