What is ARPA and how is it calculated?
ARPA (Average Revenue Per Account) is total monthly recurring revenue divided by the number of active accounts: ARPA = Total MRR / Active Accounts. Some teams call the same metric ARPU (Average Revenue Per User); the difference is whether the unit is a user or an account (a company). In B2B SaaS the correct unit is usually the account.
ARPA mirrors your pricing strategy and customer segment. A rising ARPA means successful upsell, plan upgrades or a shift towards larger customers. A falling ARPA points to discount pressure, a drift towards smaller accounts or contraction. That is why segment- and cohort-level ARPA is far more informative than a single blended average.
ARPA only becomes meaningful next to CAC and LTV. Using LTV = ARPA × gross margin / churn rate, ARPA directly drives lifetime value: lifting ARPA by 20% improves unit economics markedly at the same CAC. For many SaaS businesses the cheapest growth lever is not a new customer but more revenue per existing account.
Worked example: ARPA for a SaaS with 500 accounts
A SaaS with $42,000 total MRR across 500 active accounts has ARPA = 42,000 / 500 = $84, or $1,008 per year. If next quarter it upgrades 40 accounts, lifts MRR to $47,000 and account count stays at 505, ARPA rises to $93 — meaning the revenue growth came from going deeper with existing customers, not from new logos.
That distinction matters: MRR growing while ARPA stays flat is volume growth; MRR and ARPA growing together is value growth. In the same example, with a CAC of $600, moving ARPA from $84 to $93 shortens CAC payback from roughly 7.1 months to 6.5 months.