ARPU
Average revenue per user or account over a period — the numerator in most unit-economics calculations, and the one most often averaged badly.
Growth & MetricsARPU is total revenue for a period divided by the number of users or accounts in it. It feeds LTV and appears in most unit-economics work, so an error here propagates everywhere. The first decision is user or account: in B2B, ARPA (per account) is almost always the meaningful figure, because a 40-seat contract is one buying decision, not 40.
The deeper problem is that revenue distributions are skewed, and a mean over a skewed distribution describes nobody. A product with a €29 self-serve tier and a handful of €4,000 enterprise contracts reports an ARPU that neither group resembles. Report it by segment, and look at the median alongside the mean — when they diverge sharply, the average is being driven by a small number of accounts whose loss would move it substantially.
In practice
A product reported ARPU of €180 and priced a new tier around it. The median was €34; three enterprise accounts produced 60% of revenue. The tier launched to almost no uptake, because the actual customer base sat nowhere near the average the pricing had been built on.
Where teams get it wrong
- One ARPU across segments with very different pricing.
- Counting free users in the denominator without saying so, which halves the figure.
- Reporting the mean when the distribution is skewed, with no median beside it.
- Mixing ARPU and ARPA between reports.
- Comparing ARPU across companies with different definitions and calling it a benchmark.
Learn more
You may ask
Frequently Asked Questions
What is the difference between ARPU and ARPA?
ARPU averages revenue per individual user; ARPA averages per account or company. In B2B, ARPA is the meaningful figure, because a multi-seat contract represents one buying decision.
Should free users be included in ARPU?
Only if you say so. Both conventions exist and they produce very different numbers, so the denominator has to be stated whenever the figure is reported or compared.
Related terms
All terms- Lifetime Value (LTV)The total gross profit a customer is expected to generate before they leave — the ceiling on what acquiring them can be worth.
- Customer Acquisition Cost (CAC)The fully loaded cost of winning one new customer — all sales and marketing spend divided by the customers it produced.
- LTV:CAC RatioWhat a customer is worth against what they cost to acquire — the headline test of whether growth creates value.
- ChurnThe rate at which customers stop paying or stop using a product over a given period — the mirror image of retention.
Defined by Mara Last reviewed .
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