What is Average Revenue Per Account (ARPA)?
ARPA is your recurring revenue divided by the number of paying accounts: what the average customer is worth per month. It is also called ARPU or ARPC, with account, user and customer used loosely to mean the same thing in most SaaS reporting.
ARPA is the bridge between revenue and customers. Two companies with identical MRR and wildly different ARPA are different businesses: one sells to a few hundred enterprises, the other to tens of thousands of individuals, and almost nothing about how they operate transfers between them.
The trend usually matters more than the level. A rising ARPA means you are landing larger customers, expanding existing ones, or raising prices. A falling one means the opposite, or a shift in mix toward a cheaper tier.
Because it feeds LTV directly, ARPA inherits every definitional decision you made about MRR and about who counts as a customer. Free trials in the denominator will quietly drag it down.
How to calculate ARPA
ARPA = MRR ÷ number of paying accounts
- MRR
- normalized monthly recurring revenue at the end of the period
- paying accounts
- customers with active paid MRR at the same moment
ARPA example
Given
- MRR at month end: $50,230
- Paying customers at month end: 329
Watch this against the customer count. If ARPA climbs while customers fall, you are not moving upmarket, you are losing your small accounts.
Why ARPA matters
- It is the multiplier in lifetime value, so it decides how much you can afford to spend acquiring a customer.
- It tells you which motion the business can support. A $150 ARPA cannot carry a field sales team; a $15,000 one cannot survive on self-serve alone.
- Segmented by plan, it shows whether your packaging actually moves customers up the ladder.
Common ARPA mistakes
Counting free and trial accounts in the denominator
Including non-paying accounts turns ARPA into a measure of your funnel rather than your pricing, and it drops every time marketing has a good month.
Reading a rise as unambiguous good news
Losing your cheapest customers raises ARPA. So does raising prices. So does landing enterprise deals. Only one of those is what you meant.
Mixing per-account and per-seat views
A ten-seat account is one account. If you divide by seats sometimes and accounts other times, the series stops being comparable to itself.
How Kometrics computes ARPA
Kometrics computes ARPA as end-of-period MRR divided by the customers carrying active paid MRR at that same moment. Trials and free accounts never enter it, because a customer only exists in the movement ledger once they have paid MRR attached. That ARPA is the same figure the LTV report divides by trailing churn.
Related terms
MRR is the normalized monthly value of every active subscription you have right now. It is a run rate, not a cash figure: it answers what a month of your current book is worth, not what landed in the bank.
LTVCustomer lifetime value estimates how much revenue a single customer produces across their whole relationship with you. In subscription businesses it is derived from average revenue per account and churn rather than observed directly, because most customers have not left yet.
Expansion MRRExpansion MRR is the additional recurring revenue you earn from customers you already have. Upgrades to a higher plan, extra seats, add-on modules and price increases all count; a new customer never does.
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Kometrics connects to Stripe, Paddle, Creem and Asaas and computes ARPA continuously, with every movement behind it. Free under $1,000 MRR.
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