average revenue per user (ARPU)

Average Revenue Per User (ARPU) is a granular metric that measures the average revenue generated by each individual active user over a specific period, serving as a key indicator of how effectively a company monetizes its user base on a per-unit basis. Calculated by dividing total revenue by the total number of active users, ARPU is distinct from account-level metrics (like ARPA) because it isolates value at the individual seat or license level, which is critical for businesses relying on volume-based or per-seat pricing models. A rising ARPU typically signals that customers are migrating to higher pricing tiers or adopting add-on features, while a stagnant ARPU in a growing company may indicate that growth is being driven primarily by low-value users or heavy discounting.