Average Revenue Per Account (ARPA)
Date created: Apr 28, 2018 • Last updated: Aug 7, 2020
What is Average Revenue Per Account?
Average Revenue Per Account (ARPA) is the average revenue generated per account per year or month. It is used as an indication of revenue generation capability and the ability to meet targets.
How to calculate
Consider a company has 1000 accounts and is generating $100,000 in revenue per month. Average Revenue per Account would be, ARPA = $100,000 / 1000 = $100 per account per month
Average Revenue Per Account
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More about this metric
The ARPA trend over time gives a perspective on the value of the company's products and services. Most industries are looking for an increase in the ARPA over time. Changes in ARPA can be a reflection of changes in prices, expansion or contraction within accounts, or even changes in initial purchases.
Comparing ARPA trends for different segments of accounts may also provide useful insights. For example, if you are focused on increasing overall revenue and want to increase the initial purchase value for new accounts, watching the trend of ARPA for new accounts gives great insight into progress towards your goal. Alternatively, if you have multiple product lines, segmenting by product line will help identify high or low revenue generating products.
If you have a freemium model, the free accounts are typically not included in the calculation.