What is ARPA? Average Revenue Per Account in SaaS

Last updated on 

What is Average Revenue Per Account (ARPA)?

Average Revenue Per Account (ARPA) is a key SaaS metric that measures the average monthly or annual recurring revenue generated per customer account. It helps SaaS businesses understand how much revenue, on average, each account contributes to the company's bottom line.

ARPA is especially useful for tracking the monetization of customer segments over time, especially in product-led or self-serve models where volume is high and contract sizes vary.

Why is ARPA important in SaaS?

How do you calculate ARPA?

The formula is simple:

ARPA = Total MRR / Number of Active Accounts

Example: If your monthly recurring revenue (MRR) is $100,000 from 500 accounts, your ARPA is $200.

ARPA vs ARPU: What's the difference?

While ARPA measures average revenue per account, ARPU (Average Revenue Per User) looks at individual users. This distinction matters in multi-user platforms like Slack or Notion, where one account may have dozens or hundreds of users. ARPA aligns better with B2B decision-making.

Why ARPA matters for strategy

  • Upsell potential: A rising ARPA can signal effective expansion and account growth
  • Customer segmentation: Helps you understand which segments are most profitable
  • Pacing ARR growth: Higher ARPA can drive faster ARR gains, even with flat customer count
  • Sales alignment: Helps CS and sales teams prioritize high-value accounts

How to grow ARPA

  • Introduce higher-tier plans with more value-add features
  • Expand usage-based billing or seat-based pricing
  • Identify expansion-ready accounts using product data (tools like Customerscore.io help here)
  • Educate customers through success playbooks to increase adoption and upsell readiness

Benchmarks for ARPA

Benchmarks vary by target segment:

  • SMB SaaS: $50–$500 ARPA
  • Mid-market: $500–$2,000
  • Enterprise: $2,000+

Source: SaaS Capital, OpenView Partners, Paddle.com

FAQ

Should I track ARPA monthly or annually?

Monthly ARPA gives faster feedback. Annual is more stable. Track both if possible.

Does ARPA include churned accounts?

No. Only active accounts should be used when calculating ARPA.

What affects ARPA the most?

Pricing changes, upsells, and product adoption typically drive the biggest ARPA shifts.

Can freemium accounts be included?

Usually not, unless they generate some recurring revenue (e.g., paid add-ons).