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Average Revenue Per Account (ARPA)

27 May, 2024 1 min read

What Is Average Revenue Per Account (ARPA)?

ARPA is the average revenue generated from each customer account over a given period.

It is calculated by dividing the total recurring revenue by the number of customers during the period.

How To Define An Account When Calculating ARPA?

The definition of an account varies depending on how you set up your business.

For many SaaS or subscription-based companies, an account typically refers to an individual or a group with an active subscription within a specific period, usually on a monthly basis.

If your software allows multiple users per account, you might want to define a user as the entire account to simplify calculations.

Ensure that your definition of a user aligns with how your business earns revenue.

How To Calculate Average Revenue Per Account (ARPA)?

ARPA = Total Recurring Revenue / Number of Customers

An Example Of Average Revenue Per Account (ARPA)

A company has $100,000 in recurring revenue and 1,000 customers in a month.

ARPA = $100,000 / 1,000 = $100

Insights About Average Revenue Per Account (ARPA)

ARPA helps understand the overall value of each customer account and can be used to assess pricing strategies, customer segmentation, and resource allocation.

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