What is Average Revenue Per User?
One of the more aptly named metrics, ARPU tells you the average amount of money you make from a customer.
How is Average Revenue Per User calculated?
MRR ÷ Active Customers = ARPU
What causes my Average Revenue Per User to change?
Two factors affect your ARPU.
Firstly is the bracket in which you set your prices. If you're charging $5, $10, and $15 a month, your ARPU is going to be pretty low no matter.
Secondly is whether your customers skew toward lower or higher value plans. You may have an introductory $15 plan to help get folks on board, but have many more customers on $30, $70, and $100 plans.
Why is it important to monitor ARPU?
Plainly put, if your ARPU is low, you're going to have a hard time staying in business.
A low ARPU means that support, infrastructure, and scaling issues hit you harder, and faster, and you have less capital to hire new support staff and add more servers.
A single support request from a $10/mo customer can completely negate the money you made from them for a year.
How can I learn more about my ARPU?
Compare Date Ranges
See if your price increase a few months ago has helped to increase your ARPU.
Decided you charge too little? Set a goal for a higher ARPU and track your progress towards it.
Decide to increase your prices? Annotate the day that happened so you can see how ARPU changes from that date forward.
ARPU seems to be going up and down. Use a trend line to see how it's trending over the long term.
See how you compare to other businesses with a similar ARPU.