# What is ARPU – Average Revenue Per User?

What is ARPU – Average Revenue Per User? ARPU = total revenue / number of active customers. A metric common in SaaS and subscription businesses.

## How it works in practice

ARPU shows how much each customer is worth on average. A business with 1,000 customers and ARPU of $220 = $220,000 in revenue. To keep ARPU high: upsell, bundling, subscriptions. To grow: increase both ARPU and customer count.

## Related metrics

- LTV — annual ARPU ≈ one-year LTV
- AOV — ARPU = AOV × annual purchase frequency
- MRR — ARPU × subscribers = MRR
- Upsell — the way to increase ARPU

## Common misconception

'ARPU = AOV.' No. AOV is the average per transaction. ARPU is the average per customer over a period. A customer who bought 5 times at AOV $28 = ARPU $140. A customer who bought once at AOV $110 = ARPU $110. High ARPU requires both frequency and AOV.

## How to fix it

Low ARPU? (1) Increase AOV — a free-shipping threshold, bundles, (2) Increase frequency — subscriptions, loyalty, win-back, (3) Segment by ARPU — who are your highest-ARPU customers? Court them, (4) Analyze churn — customers who left lower average ARPU.

## Real-world example

Supplement store: ARPU $95/year (average). Three segments: subscription ($215/year), repeat non-subscribers ($135), one-time ($40). Shifting 15% of repeat customers to subscription raised overall ARPU to $110.

## Where to start

Calculate ARPU by segment, not just the overall average. Low ARPU + high churn = a product problem. Low ARPU + low churn = an upsell opportunity. The distinction is critical.

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Category: Finance · From the [Jimmy OS KPI Glossary](https://jimmy-os.com/glossary/kpi.md) · Source page: https://jimmy-os.com/glossary/kpi/arpu-average-revenue-per-user