What is ARPA (Average Revenue per Account)?
ARPA measures the average recurring revenue you earn from each paying account over a specific period (monthly or annually).
Instead of looking only at total MRR/ARR, ARPA tells you how much revenue each account contributes, which is critical for segmenting customers (SMB vs mid-market vs enterprise), designing price points, and sizing your go-to-market motion.
In value-creation terms, ARPA feeds straight into unit economics: it informs customer lifetime revenue and LTV, shapes acceptable CAC and payback period, and, together with net revenue retention (NRR), highlights whether growth comes from acquiring many low-value accounts or a smaller set of high-value ones.
Formula
You can compute ARPA on different time bases:
- Monthly ARPA: use monthly recurring revenue (MRR) and paying accounts in that month.
- Annual ARPA: use annual recurring revenue (ARR) and paying accounts over the year, or multiply monthly ARPA by 12.
Example
Imagine a B2B SaaS company generating $120,000 in monthly recurring revenue from 500 paying accounts.
- ARPA (per selected period – monthly)
Each account contributes $240 per month.
- Normalized monthly ARPA
Because the input period is already monthly, the normalized monthly ARPA remains $240 per account per month.
- Annualized ARPA
Each account represents $2,880 in recurring revenue per year.
At ~$240 per account per month, the business sits in an SMB-oriented ARPA band, where value creation usually depends on efficient acquisition, strong expansion revenue, and keeping churn low rather than landing a few very large enterprise deals.