ARPA vs ARPU in SaaS: definitions, formulas and when to use each
ARPA divides revenue by accounts, ARPU by users. Both formulas worked through, a real ARPU from Dropbox's annual report, and CMRR, the committed version of MRR.
Your board deck shows “ARPU”, your investor’s template asks for “ARPA”, and the two numbers can differ by a factor of nine for the same company. You need to know which one to report, how each is calculated and why they can move in opposite directions. Average revenue per account (ARPA) divides recurring revenue by the number of paying customers; average revenue per user (ARPU) divides it by the number of people using the product.
The choice is not cosmetic. It decides whether a lost customer, a new small customer or a price change shows up in your numbers at all. This guide gives both formulas, works them through with the same company over two months, reads a real ARPU from an annual report and adds committed monthly recurring revenue (CMRR). For the basics of the SaaS model, see What is SaaS?.
ARPA and ARPU in plain terms
Think of it like a restaurant’s takings. You can divide the evening’s revenue by the number of tables served, or by the number of people who ate. A table of eight and a table of two are both one table, but 10 diners. The first number tells you what a booking is worth. The second tells you what a seat is worth.
In SaaS, the table is the account: the company or person that pays the invoice. The diner is the user: each person with a login.
- ARPA = monthly recurring revenue (MRR) / number of paying accounts.
- ARPU = MRR / number of paying users.
MRR is the recurring revenue you bill in a month, normalized to a monthly amount, without one-time fees. Use the same moment for the numerator and the denominator: end-of-month MRR with end-of-month counts, or a period’s revenue with the period’s average count.
When to use each
| Situation | Use | Why |
|---|---|---|
| You sell to companies, one invoice per company | ARPA | The account is what you win, lose and spend on acquiring |
| You price per seat and want to test the seat price | ARPU | It isolates what one seat earns |
| Consumers, one person per subscription | Either | Accounts and users are the same count |
| You calculate customer lifetime value (LTV) | ARPA | Churn is counted in accounts, so revenue must be too |
| You compare yourself with a public company | Whatever the company defines | Read the filing’s definition first |
In B2B SaaS, ARPA is usually the better fit for one reason: acquisition cost and churn are both measured per customer. Mixing per-user revenue with per-customer churn produces an LTV that means nothing. For that calculation, see LTV in SaaS.
Worked example: same company, two months
Example: a labeled hypothetical. A project-management tool charges $30 per user per month.
Month one: 200 paying accounts with 1,800 users in total, so MRR is 1,800 x $30 = $54,000.
During month two:
- It wins 20 small accounts with two users each: 40 users, 40 x $30 = $1,200 of new MRR.
- It loses one large account with 100 users: 100 x $30 = $3,000 of lost MRR.
| Measure | Month one | Month two |
|---|---|---|
| Paying accounts | 200 | 200 + 20 - 1 = 219 |
| Paying users | 1,800 | 1,800 + 40 - 100 = 1,740 |
| MRR | $54,000 | $54,000 + $1,200 - $3,000 = $52,200 |
| ARPA | $54,000 / 200 = $270.00 | $52,200 / 219 = $238.36 |
| ARPU | $54,000 / 1,800 = $30.00 | $52,200 / 1,740 = $30.00 |
ARPU did not move. Every user still pays $30, so a per-user metric cannot see the change. ARPA fell by ($270.00 - $238.36) / $270.00 = 11.7%, because the company swapped one large account for 20 small ones. Account count went up, MRR went down, and only ARPA tells that story.
The reverse also happens. If no customer leaves, a price rise from $30 to $33 per user moves ARPU and ARPA by the same 10%. Report both when you change prices, and ARPA alone when you report on your customer mix.
A real ARPU from a public filing
Dropbox reports ARPU in its annual report and defines it as revenue for the period “divided by the average paying users during the same period”. Average paying users is the count at the start of the period plus the count at the end, divided by two (Dropbox Form 10-K for 2025).
The filing’s figures for the year ended December 31, 2025:
- Revenue: $2,521.0 million (2024: $2,548.2 million).
- Paying users at year end: 18.08 million (end of 2024: 18.22 million).
- Reported ARPU: $138.91 (2024: $140.23).
You can redo the calculation. Average paying users: (18.22 + 18.08) / 2 = 18.15 million. ARPU: $2,521.0 million / 18.15 million = $138.90. The cent of difference from the reported $138.91 comes from user counts rounded to two decimals. Per month, that is $138.91 / 12 = $11.58 per paying user. ARPU fell by $1.32, or 0.9%, from 2024.
Note what Dropbox counts. Paying users are “users who have active paid licenses”, so a team plan with 10 licenses counts as 10 users. That makes ARPU the natural metric for a product sold largely by the license. A company that sells mainly by the account would report ARPA.
CMRR: committed monthly recurring revenue
CMRR is MRR adjusted for what is already signed. Add contracts that are signed but not yet live; subtract revenue from customers who have given notice to cancel. It answers “what will MRR be if nothing else changes?”
Example: the same hypothetical company ends month two with $52,200 of MRR. It has signed $4,000 of new monthly contracts that start next month, and customers worth $1,500 a month have given notice.
CMRR = $52,200 + $4,000 - $1,500 = $54,700.
Keep ARPA on live MRR, not on CMRR. The signed accounts are not paying yet, and counting them would raise ARPA before any money arrives. Show CMRR next to MRR as a forward-looking line, and say which contracts it includes.
Common mistakes
- Calling ARPA “ARPU” in a B2B deck. Readers compare your number with companies that define it differently. Why it happens: ARPU is the better-known acronym. Instead: write the definition under the number, as Dropbox’s filing does.
- Mixing periods. Annual revenue divided by end-of-year accounts gives an annual ARPA that looks 12 times larger than a monthly one. Why it happens: finance reports yearly, dashboards monthly. Instead: label every ARPA with its period and the counting method.
- Including one-time fees. Setup or onboarding fees in the numerator inflate ARPA in a month with many new customers. Why it happens: total revenue is the easiest number to pull. Instead: use recurring revenue only.
- Reading a flat ARPU as “nothing changed”. As the example shows, ARPA can fall 11.7% while ARPU stays at $30. Why it happens: one metric gets all the attention. Instead: track both, plus the account and user counts behind them.
For how ARPA feeds into the rest of the model, see the SaaS business model.
Sources
- Dropbox, Inc., Form 10-K for the fiscal year ended December 31, 2025, key metrics and definitions.
In three sentences
ARPA is monthly recurring revenue divided by paying accounts, and ARPU is the same revenue divided by paying users. In the example, swapping one 100-user account for 20 two-user accounts left ARPU at $30 but cut ARPA by 11.7%, from $270.00 to $238.36. Use ARPA when you sell to companies and calculate LTV, use ARPU to test a per-seat price, and keep CMRR as a separate line for contracts that are signed but not yet live.
