What is average revenue?

Average revenue shows how much revenue your company generates per unit or per customer account. While it’s a non-GAAP metric, it’s a valuable tool for executives and investors to assess how effectively the business generates revenue—and to evaluate growth potential at a more granular, unit-level view.

What is the average revenue per account (ARPA)?

Average revenue per account (ARPA) is a key metric for SaaS businesses, showing how much revenue each customer account brings in—typically measured monthly or annually.

What is the average revenue per user?

Average revenue per user (ARPU) measures how much revenue your business generates per individual user over a specific time period. Comparing ARPU to ARPA can help you assess how effectively your revenue scales as your customers add more users to your product.

What is average revenue per unit?

Average revenue per unit looks at the revenue generated from selling a single unit of a product. It’s more commonly used by businesses that sell physical goods, such as ecommerce brands, rather than software or services.

When to use ARPA vs. ARPU?

Whether you focus more on ARPA or ARPU depends on your pricing model. If your business doesn’t charge by user, ARPU may not be the most meaningful metric. In that case, tracking ARPA offers a clearer picture of how effectively you’re growing revenue—especially through expansion. On the other hand, if your pricing is seat-based or varies with active users, ARPU becomes more valuable. It helps you measure the return on adding users and how that impacts overall growth and customer value.

What is the difference between average revenue and marginal revenue?

Average revenue measures how much revenue you earn per account or user over a specific time period. Marginal revenue is a bit more complex—it models how much additional revenue you can expect from selling one more unit, factoring in scale and changes in demand. It’s more of an economic concept that highlights how pricing and demand impact growth.

There’s no universal benchmark for ARPU—it’s highly dependent on your pricing model and business strategy. A strong ARPU for one company might not be ideal for another, even in the same industry. Instead, look at ARPU trends over time. Is revenue per user increasing or declining? Are cross-sells or upsells helping you generate more from your existing base?

Like ARPU, ARPA doesn’t have a one-size-fits-all benchmark. Use it as a directional metric to track how your revenue per account is evolving over time.

What is the difference between ARPU and LTV?

ARPU is a snapshot of average revenue per user or unit during a specific period. LTV (lifetime value) adds churn into the mix to estimate how much revenue an account will generate over its entire relationship with your company.