Average Revenue per Account (ARPA)
What is ARPA?
ARPA is average revenue per account, the average recurring revenue generated per customer account — total MRR divided by the number of active accounts, typically measured monthly. It is a core input to LTV and unit-economics calculations.
ARPA helps explain whether recurring revenue changes come from the number of accounts or the amount each account pays. It is most useful when an account is the unit that signs and pays for a subscription. A workspace with 50 users can still represent one account.
Also known as: Average Revenue Per Account
Formula
ARPA = MRR / Total Number of Accounts | Variable | Meaning |
|---|---|
MRR | Total monthly recurring revenue. |
Total Number of Accounts | Count of active customer accounts in the period. |
How to use it
- Define an account and apply that definition to both subscription revenue and customer counts. Separate free accounts from the paying base.
- Divide closing MRR by active paying accounts at the same reporting date. Use annual values only if you explicitly label the result annual ARPA.
- Break the average into meaningful groups such as plan, customer size, or acquisition cohort. Track the median and concentration as well when a few large customers dominate.
Worked example
Hypothetical worked scenario
A fictional collaboration tool has $24,000 MRR from 120 paying companies. Together those companies have 1,200 paid seats.
Monthly ARPA = $24,000 ÷ 120 = $200 per account. Revenue per paid seat = $24,000 ÷ 1,200 = $20.
The two denominators answer different questions. Using the $20 seat figure as account revenue would understate an account-level LTV estimate by a factor of ten in this example.
What the result tells you
A rising average can indicate successful upgrades, a shift toward larger buyers, or loss of small accounts. Compare the same-account revenue change with the changing customer mix before attributing the movement to pricing. An average alone does not establish what caused the change.
Assumptions and common mistakes
- ARPU and ARPA are sometimes used interchangeably. When an account contains multiple users, write down the unit explicitly.
- Do not divide total revenue including services by recurring subscription accounts and label the answer recurring ARPA.
- Zero paying accounts makes this average undefined; a zero dollar result would conceal the missing denominator.
Frequently asked questions
Should I use average or ending account count?
This guide uses an end-of-period subscription snapshot. An average count can be appropriate for revenue earned over a period, but it is a different convention and should be labeled.
Does higher ARPA always mean better economics?
No. Larger customers may require more service, longer sales cycles, or discounts elsewhere. Pair ARPA with delivery cost, retention, and acquisition cost for the same segment.
Sources and methodology
The references below explain the underlying methods. Our worked scenarios use hypothetical figures; they are not company results or current market benchmarks.
- ChartMogul: Average Revenue Per Account report
MRR divided by paying subscribers.
Found an error or a definition that differs from your reporting? Send a correction with the page URL and the method you use.