Description
ARPA is short for Average Revenue Per Account. This metric can be used to quantify a SaaS business’s average monthly recurring revenue (MRR) per account.
Example
ARPA is calculated as Monthly Recurring Revenue (MRR) / Total number of accounts. By simply replacing the MRR with ARR, companies can easily convert this monthly metric into a yearly one. Suppose a company has an MRR of $35,000 with a total of 10 customers. Its ARPA will therefore be $3,500.
Why it matters
ARPA is used by companies to compare groups of customer accounts by month. It helps in identifying trends across account expansion and contraction. It can also be used to evaluate pricing plans.