ARPU (average revenue per user)
Average revenue per user: recurring revenue in a period divided by the number of paying customers. Some teams divide by all active users instead, so check the denominator before comparing numbers. The lever growth plans most often skip - tiers, add-ons and annual plans raise what each customer pays and move revenue without a single extra signup.
Where it's used
Used in subscription and telecom reporting, in pricing work and investor updates. Good for showing whether growth comes from more customers or from each paying more.
How to calculate it
ARPU = Recurring revenue ÷ Paying customers
Worked example
Illustrative numbersA SaaS has 2,000 customers paying $60,000 a month in total. After adding an annual tier and an add-on, the same customers pay $72,000.
ARPU before
$60,000 ÷ 2,000 customers = $30
ARPU after
$72,000 ÷ 2,000 customers = $36
Revenue added
$72,000 - $60,000 = $12,000
What it tells you
That is 20% more revenue with no new signups. If ARPU rises while customer numbers fall, check that you are not pricing people out.