What is ARPU? 6 Tips to Optimize and Grow Your Average Revenue Per User

In 2009, my mentor Dharmesh Shah (co-founder of Hubspot) sat in my office in San Francisco and casually dropped an acronym I hadn’t heard.

“We want to increase our ARPU, he said.

I smiled and nodded… but the blank stare on my face was a giveaway.

I was clueless.

When someone as abundantly successful as the co-founder of a company now valued at over $14B (Yes, B for BILLION) mentions what his company is trying to do…

You take notes.

Since that day, ARPU has become one of my key SaaS growth metrics that I insist on calculating with my clients.

Then, once you know it… you’ve got to grow it!

So in today’s video, I’m going to explain what ARPU is, how you track it and how to improve it.

Watch it below. Your profit margins will thank you.

In this video, once we cover the basics of what ARPU is, I’ll share with you:

  • The difference between ARPU and ARPA
  • The 2-minute formula for calculating it
  • How to know good from bad ARPU numbers
  • Projections depending on business size
  • Why ARPU can help smash your SaaS growth ceiling
  • Strategies to improve ARPU

You already know I’m pumped about SaaS metrics.

I don’t follow sports.

I follow numbers and work with SaaS founders like you to get true visibility about what is and is not working in a tech business… and then how to DO something about it.

You don’t have to love it as much as I do.

But you’ve got to know what these metrics mean.

Hit play on the video and let’s get us both on the same page, yeah?

P.S. Prefer audio? Subscribe to the Growth Stacking Show directly on Apple Podcasts or Spotify and make sure to leave a rating and review if you find the show helpful.

Dan Martell has advised more startups than his hometown has people and teaches startup founders like you how to scale. (Get access to all my latest business hacks.) He previously created, raised venture funding for and successfully exited three tech companies: Spheric, Flowtown and Clarity.fm. You should follow him on Twitter @danmartell for tweets that are actually awesome.

Originally published at https://www.danmartell.com on November 30, 2020.



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Dan Martell

I coach ambitious software founders | Award-winning angel investor / 5x founder with 3x exits | Speaker | Proud Father.