Definition
ARPA (Average Revenue Per Account) is revenue divided by the average number of paying accounts in a period. It is often more decision-useful than ARPU in B2B SaaS because you sell to companies, not individual users.
ARPA formula
ARPA = revenue / average paying accounts
How to calculate ARPA (step-by-step)
- Choose a time window (month/quarter) and define what counts as a paying account.
- Sum revenue for the same window (be consistent: gross vs net of refunds/credits).
- Compute average paying accounts for the window (e.g., (start + end) / 2).
- Divide revenue by average accounts to get ARPA.
ARPA vs ARPU
- ARPA is per account/customer; ARPU is per active user.
- If you price per company, ARPA usually matches how you sell and report.
- If you price per seat/user, ARPU can be more natural.
How to use ARPA with payback and LTV
- Monthly gross profit ~ ARPA * gross margin.
- Payback (months) ~ CAC / (ARPA * gross margin).
- LTV (gross profit) ~ (ARPA * gross margin) / churn (shortcut model).
Data QA checklist
- Use average paying accounts, not total signups.
- Keep revenue definition consistent (gross vs net, refunds/credits).
- Segment by plan and company size if pricing differs.
ARPA benchmarks (directional)
- There is no universal ARPA benchmark; compare within your segment.
- ARPA should cover CAC payback in a reasonable window for your stage.
- Use ARPA trends to detect pricing and mix shifts early.
Common mistakes
- Mixing accounts and users (denominator mismatch).
- Comparing ARPA across periods with major mix shifts without segmentation.
- Changing what revenue is included (net vs gross) without labeling.