ARPU is short for Average Revenue Per User. Basically ARPU is the average revenue you make from a user over a particular month. This is a simple, yet powerful metric that can inform many different areas of your business.
To be as accurate as possible, we use Active Users to calculate ARPU, and use our Customer Profiles to combine any users who have multiple plans/transactions into 1 Active User.
Here’s how its calculated: ARPU = MRR / Active Users
Why is ARPU important?
Measuring ARPU is important because it’s a key indicator of both revenue source and margin growth, and informs analysis of whether or not you are going to hit your revenue targets. A higher ARPU is also indicative of how successful you are at up-selling/cross-selling additional services to individual customers.