---
title: "Average revenue per user (ARPU)"
url: "https://trialvalid.com/saas-metrics/arpu.md"
canonical_url: "https://trialvalid.com/saas-metrics/arpu"
last_updated: "2026-10-19"
type: "conceptual"
summary: "ARPU is monthly recurring revenue spread across your paying customers, the average amount each one pays per month."
related: ["https://trialvalid.com/saas-metrics/mrr.md", "https://trialvalid.com/saas-metrics/customer-lifetime-value.md", "https://trialvalid.com/saas-metrics/expansion-mrr.md", "https://trialvalid.com/mrr-calculator.md", "https://trialvalid.com/saas-metrics.md"]
---

# Average revenue per user (ARPU)

> **For AI agents:** the complete index of TrialValid pages is [llms.txt](https://trialvalid.com/llms.txt). Every page is also served as markdown at its URL plus .md.

ARPU is monthly recurring revenue spread across your paying customers, the average amount each one pays per month.

## Why it matters

ARPU turns a revenue total into a per customer figure, and that figure is the input to almost every other unit economics calculation. Customer lifetime value multiplies it by margin, CAC payback divides acquisition cost by it, and pricing decisions start from it.

It also moves for reasons that have nothing to do with how many customers you have. A growing share of expensive plans lifts it, and a flood of small sign-ups drags it down even while total revenue rises. Watching ARPU next to your customer count tells you whether growth comes from more customers or from each customer paying more.

## The formula

Add up the monthly recurring revenue from every paying customer, then divide by the number of paying customers. Trials, free accounts and customers who have not been charged yet are left out of both numbers. Some teams say ARPA, average revenue per account, when a customer is an account with several users. The sum is the same.

```text
ARPU = MRR / paying customers
```

## A worked example

A subscription business has 400 paying customers on three plans. These numbers are made up for illustration.

| Example numbers | Value |
| --- | --- |
| Starter: 200 subscribers at $50 a month | $10,000 |
| Team: 150 subscribers at $150 a month | $22,500 |
| Business: 50 subscribers at $350 a month | $17,500 |
| Total MRR | $50,000 |
| Paying customers | 400 |
| ARPU | $125 |

Dividing $50,000 by 400 subscribers gives an ARPU of $125. Notice that no single plan costs that much. The figure is a blend, and it depends on the mix: without the 50 Business customers, the same sum gives $92.86.

Monthly price per plan against blended ARPU (example numbers):

| Item | Value |
| --- | --- |
| Starter | $50 |
| Team | $150 |
| Business | $350 |
| ARPU | $125 |

## How to improve it

ARPU rises when customers pay more for the same relationship, or when the mix shifts toward larger accounts.

- Review plan prices and packaging against the value each tier delivers, and move features that serious buyers need into a higher tier.
- Offer add-ons and extra seats so a growing customer has something to buy without switching plans.
- Aim acquisition at the customers who fit your higher tiers, so new sign-ups do not pull the average down.
- Track ARPU by plan and by cohort, not only as one blended number, so you can see which group moved it.

## Common mistakes

- Dividing total revenue, including one time charges and setup fees, by customers. ARPU as defined here uses recurring revenue only.
- Counting free accounts and trials in the customer count. They pay nothing, so they pull the average toward zero and hide what a paying customer is worth.
- Quoting one blended figure when your plans differ widely. The average describes no real customer, so also look at ARPU per plan.
- Comparing an annual plan billed once with a monthly plan without converting both to a monthly amount first.
- Reading a rising ARPU as good news without checking churn. Losing small customers raises the average while the business shrinks.

## Calculate it and read next

Work it out with your own figures in the [MRR calculator](https://trialvalid.com/mrr-calculator.md). Then read about [Monthly recurring revenue (MRR)](https://trialvalid.com/saas-metrics/mrr.md), [Customer lifetime value](https://trialvalid.com/saas-metrics/customer-lifetime-value.md) and [Expansion MRR](https://trialvalid.com/saas-metrics/expansion-mrr.md).

- [Monthly recurring revenue (MRR)](https://trialvalid.com/saas-metrics/mrr.md): the revenue total that ARPU divides.
- [Customer lifetime value](https://trialvalid.com/saas-metrics/customer-lifetime-value.md): what ARPU becomes once margin and churn are applied.
- [Expansion MRR](https://trialvalid.com/saas-metrics/expansion-mrr.md): the revenue growth that lifts ARPU without new customers.

## Frequently asked questions

### What is the difference between ARPU and ARPA?

ARPU divides by users and ARPA divides by accounts. When every customer is one account paying one subscription they are the same number. Use whichever matches how you bill.

### Should ARPU include free users?

For the figure used in lifetime value and payback, no. Divide recurring revenue by paying customers only. If you want a figure across all sign-ups, label it clearly as revenue per sign-up.

### How often should I calculate ARPU?

Monthly is the usual rhythm, matching MRR. Look at it per plan and per signup month as well, since a blended figure can hide a shift in mix.

### Why did my ARPU fall while revenue grew?

Most often because the new customers joined cheaper plans than your existing base. Revenue can rise on volume while the average per customer falls.

## Related

- [MRR: monthly recurring revenue](https://trialvalid.com/saas-metrics/mrr.md)
- [Customer lifetime value (LTV)](https://trialvalid.com/saas-metrics/customer-lifetime-value.md)
- [Expansion MRR: growth from existing customers](https://trialvalid.com/saas-metrics/expansion-mrr.md)
- [MRR calculator](https://trialvalid.com/mrr-calculator.md)
- [SaaS metrics glossary](https://trialvalid.com/saas-metrics.md)