Growth Metrics

What Is Average Revenue Per User (ARPU) and How to Calculate?

Average Revenue Per User (ARPU) or Average Revenue Per Customer (ARPC) is an essential metric to understand your customers. Average Revenue Per Customer will help you identify trends against different time periods and segments of customers. To fully understand ARPC, it is best to calculate it for all of your customer segments so any disparity between types of customers can be identified and addressed.

The dream is to have a high ARPC, and if a subscription business, one that increases over time. If your ARPC is too low it could mean you aren’t targeting the right customer or your product is too cheap, so you need to find a way to extract more value (revenue) from your product — whether it is different value add on products, or targeting more valuable customers.

How to Calculate:

Manually:

($) Total revenue generated of the TimePeriod /(#) Customers during the same period = ($) Average Revenue Per Customer

ARPC is calculated by dividing the total revenue generated during a specific time period (e.g. week, month, quarter) by the total number of customers during that same time. It is important to note that you only want to include active customers in this calculation, hence why we call it Average Revenue Per Customer vs. Average Revenue Per User.

For example, if you generated $20,000 last month and had 4000 customers during that month, your

Average Revenue Per Customer would be $5.00

$200 / 4000 = $5.00 ARPU

1. Create a top line calculation for Average Revenue Per Customer (ARPC) during the time periods.
2. Create a calculation for each customer segment in your data so you can have a more detailed understanding of how your segments operate.
3. Repeat every month or your desired timeframe.

Automate:

Connect to Peel which will automate the calculation of your Average Revenue Per Customer for the past 30 days.

Every Friday morning via Slack, Peel will send you a report of:

1. Top line Average Revenue Per Customer for the previous 30 day period
2. Top line your Average Revenue Per Customer change from the previous 30 day period
3. Average Revenue Per Customer per segment
4. Average Revenue Per Customer change per segment

At Willy Wonka’s Chocolate Factory, ARPC is down 19.2% compared to the previous 30 day period. Then we are able to see the ARPC for each segment — Product Type, Country Market, Customer Type

🌟Plus a deep dive analysis of your revenue, revenue growth rate, and customer retention.🌟

If you don’t want to calculate ARPC across all your customer segments every week, give Peel a try. You can find in the Slack App Directory.