ARPU vs ARPA โ Which Should You Track?
For B2C SaaS and consumer products, ARPU (per user) is the right metric. For B2B SaaS, ARPA (per account) is more meaningful โ a 500-person company paying $5,000/month has 1 account, but may have 200 individual users.
ARPA tells you what the typical customer pays. ARPU tells you what the typical seat costs. Both are useful: ARPA for go-to-market and sales decisions, ARPU for product and pricing strategy.
ARPU and LTV
ARPU is a direct input to LTV. At 2% monthly churn: LTV = ARPU ร (1 รท 0.02) ร gross margin = ARPU ร 50 ร 0.75 = ARPU ร 37.5. A $100 ARPU business has $3,750 LTV. A $300 ARPU business has $11,250 LTV โ triple the revenue per user, triple the LTV, 3ร the CAC budget available.