SaaS Metrics
Average Revenue Per User (ARPU)
Average Revenue Per User (ARPU) measures the average monthly revenue generated from each paying customer. It's a simple but powerful metric that reveals pricing effectiveness and customer value.
Formula
ARPU = MRR / Total paying customersBenchmarks by Segment
| Customer Segment | Typical ARPU |
|---|---|
| Consumer / B2C SaaS | $5–30/month |
| SMB SaaS | $30–200/month |
| Mid-market SaaS | $200–2,000/month |
| Enterprise SaaS | $2,000–50,000+/month |
Why ARPU Matters
ARPU directly impacts every other SaaS metric:
- Higher ARPU = faster CAC payback
- Higher ARPU = higher LTV
- Higher ARPU = fewer customers needed to hit revenue targets
- Growing ARPU = sign of strong expansion revenue
Increasing ARPU
- Tiered pricing — encourage upgrades to higher plans
- Usage-based pricing — revenue grows with customer success
- Add-ons and modules — sell additional features
- Annual billing discounts — higher upfront commitment
- Price increases — for mature products with proven value
ARPU in AI-Run Companies
AI-run companies optimize ARPU differently:
- AI pricing optimization — continuously A/B tests pricing to find the revenue-maximizing point
- Automated upselling — AI identifies upgrade opportunities and presents them at the right moment
- Usage-based models — natural ARPU expansion as customers use more
- Zero-cost support — ability to serve low-ARPU customers profitably (no support team to pay)
That last point is key: traditional SaaS companies can't profitably serve $10/month customers because support costs eat the margin. AI-run companies can, opening up larger addressable markets.