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  2. /Average revenue per user (ARPU)

What is average revenue per user (arpu)?

The mean revenue generated per user over a specific time period. A key input for LTV calculations and pricing decisions.

Formula

ARPU = Total Revenue / Total Users (for a given period)

Why it matters

ARPU trends reveal pricing power and monetization efficiency. Rising ARPU with stable users = healthy expansion. Falling ARPU might indicate pricing pressure or plan downgrades.

How to improve

Introduce higher-priced tiers. Create upsell paths. Bundle premium features. Implement usage-based pricing components. Focus on expansion revenue from existing customers.

Related playbooks

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Slack

Make them feel the limit first

Don't ask users to pay before they've gotten value. Wait until they hit a limit that hurts, then offer the upgrade.

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Want to improve your average revenue per user (arpu)?

Get experiment recommendations tailored to your specific metrics.

Related terms

Customer lifetime value (CLV/LTV)

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