The denominator defines your average.
Average revenue per account divides recurring revenue by paying accounts. ARPU instead uses users. A business with multiple seats per customer can have very different ARPA and ARPU even though total revenue is unchanged.
Use a consistent snapshot or a consistently averaged period. Including free accounts, trials or inactive users in one period but not another changes the interpretation. This model uses paying accounts at the MRR measurement date.
The formula, made clear.
- MRR
- Recurring monthly revenue, excluding one-off fees.
- Paying accounts
- The accounts represented in the MRR numerator; not individual seats.
Put the numbers in context.
$100,000.00 MRR across 500 paying accounts gives $200.00 monthly ARPA and $2,400.00 annualized recurring revenue per account.
| Input | Example value |
|---|---|
| Monthly recurring revenue | $100,000.00 |
| Active paying accounts | 500 accounts |
| Monthly revenue per paying account | $200.00 |
What this calculation assumes
Snapshot paying-account ARPA. Annualized ARPA assumes the current monthly level persists; it is not realized revenue or contract value. Fractional average account counts are allowed when using period averages consistently.
What to consider next.
Segment the average by plan or customer size before using it in LTV and market-sizing assumptions.
How we approach financial models →