Average Revenue Per User (ARPU) vs Annual Recurring Revenue (ARR)
ARR measures the total size of your recurring revenue base; ARPU measures the average revenue contribution per customer. Both are standard SaaS metrics but serve different strategic purposes: ARR shows scale, ARPU reveals monetisation efficiency.
At a Glance
Average Revenue Per User (ARPU)
Average monthly or annual revenue per active customer
Annual Recurring Revenue (ARR)
Predictable annual revenue from subscriptions
Key Differences
- ARR is an absolute dollar total; ARPU is a per-customer average.
- Growing ARPU without growing customer count still increases ARR.
- ARPU helps identify pricing power; ARR shows overall market penetration.
- ARPU can be calculated monthly or annually; ARR is always annualised.
When to Use Each
Use Average Revenue Per User (ARPU) when…
Use ARPU to benchmark pricing tiers, measure upsell effectiveness, and segment performance by customer cohort.
Full Average Revenue Per User guide →Use Annual Recurring Revenue (ARR) when…
Use ARR to report total business scale, calculate valuation multiples, and set annual revenue targets.
Full Annual Recurring Revenue guide →Formulas
AVERAGE REVENUE PER USER (ARPU)
ARPU = Total Revenue / Number of Active Customers
Monthly Revenue / Average Active CustomersANNUAL RECURRING REVENUE (ARR)
ARR = Monthly Recurring Revenue × 12
Average Contract Value × Number of CustomersCharts
Average Revenue Per User (ARPU)
Annual Recurring Revenue (ARR)