The real secret sauce to understanding your customer is being able to understand your Average Revenue Per User (ARPU). This metric allows you to identify trends and implement change that can shift the trajectory of your business towards that large pool of SaaS profits we all dream of. Here we walk through exactly how to calculate ARPU (Average Revenue Per User) including what to and not to include in the calculation, as well as how to optimize this crucial SaaS metric.

1. ARPU:
Calculating and Optimizing
Price Intelligently’s SaaS Metric Mondays
ARPU – Average Revenue Per User

2. Let’s talk about ARPU
A “vanity metric” that actually matters
ARPU – Average Revenue Per User

3. ARPU =
Average Revenue Per User
ARPU – Average Revenue Per User

4. ARPU=
The average amount of monthly revenue that you receive per
user. It can be the base for accelerating your Monthly Recurring
Revenue growth through higher paying customers. It is also a
source of fuel for your customer Lifetime Value (LTV) goals.
Want To See What Your ARPU Metric Are Right Now?
Get your free ProfitWell account – 1-click SaaS Metrics >>
ARPU – Average Revenue Per User

5. Here’s How You Visualizes ARPU
(ProfitWell Dashboard)
ARPU – Average Revenue Per User

6. All that stuff is great but…why
should you care?
ARPU – Average Revenue Per User

7. “ARPU – the one “vanity metric”
that actually matters when done
right”
ARPU – Average Revenue Per User

8. More specifically…
Understanding your Bookings can help:
Finance
See the health of the
business. It allows you to
see what kind of business
you need to be from a
pricing and value
perspective.
See the breakdown of your ARPU with ProfitWell >>
Product
Validate and determine
whether the value of the
product is being aligned to
the right customer
S&M
Constantly challenge and
develop the value
propositions and targeting to
get better quarter over
quarter.
ARPU – Average Revenue Per User

9. Lets dive deeper and
calculate ARPU like a
#SaaS superstar
ARPU – Average Revenue Per User

10. What items are included in
calculating ARPU?
ARPU Criteria Breakdown
Include Exclude
Monthly Recurring Revenue
Free Users
Account Upgrades
Account Downgrades
Inactive UsersLost MRR from churned
customers
Total Paying Customers
ARPU – Average Revenue Per User

11. The calculation breakdown
EQUATION
Take the SUM of all your active customer MRR and divide that by the total
number of customers. Keep in mind that this calculation is done in a monthly
time frame.
ARPU – Average Revenue Per User
Total
MRR
Total
Customers

12. Once you master calculating
ARPU, Optimize It!
ARPU – Average Revenue Per User

13. Increase the number of Bookings in
your SaaS business by:
1. Add-Ons, Value Metrics, and Upgrades
2. Ensure your retention is on point, especially
for larger customers
3. Make sure you’re targeting the right
customer personas $
$
$
$ $
$
$
$
$
$
$
$
ARPU – Average Revenue Per User

14. Any way you can absolutely increase the amount of revenue
from your customers month over month should be
considered. The easiest way to do this is to make sure that a
value metric is central to your pricing strategy to bake in
expansionary revenue
Key Optimization
Add-Ons, Value Metrics, and Upgrades
ARPU – Average Revenue Per User

15. MRR churn is directly connected to your ARPU, as leaking customers
(especially large ones) will reduce your customers and your revenue.
Make sure you’re running a proper retention process
Key Optimization
Ensure your retention is on point especially for
larger customers
ARPU – Average Revenue Per User

16. You may be deflating your ARPU by targeting too many small,
distracting low revenue customers. Make sure your quantify
your buyer personas properly and target the right ones for
growth
Key Optimization
Make sure you’re targeting the right customer personas
ARPU – Average Revenue Per User

17. Boom.
Now you can maximize the health of
your SaaS business with your new
mastery of ARPU.
ARPU – Average Revenue Per User

18. Want real time SaaS Metrics?
Know and understand your SaaS Metrics
with ProfitWell for free – the most accurate
metrics on the market
Click here to get your free ProfitWell account >>
ARPU – Average Revenue Per User