Often considered a ‘vanity metric’, the Average Revenue per User/Unit (ARPU) is quite the opposite. In fact, it serves as a great benchmarking metric, needed to project revenue targets by a business, and take meaningful decisions based on those numbers.

The usage of ARPU as a metric originated from the telecom sector and is also used in the cable TV industry and to a great extent, digital publications too. ARPU is the total revenue divided by the number of customers.

As the telecom sector typically deals with a subscriber base, you can extrapolate the definition of ARPU to SaaS as the average revenue that a business makes per user over a specific duration (monthly, quarterly or annually).

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