Contracted Average Revenue Per User
The average annualized contracted revenue per active user seat — total signed-contract value, live or not, divided by current seats.
◆ Currency
Formula
Built from
What it measures
The total annualized value of every signed contract — including deals closed but not yet billing — divided by the count of active user seats at a point in time. It reflects the per-seat value of all the commitments you have locked in, regardless of activation status. One-time setup fees, professional services, and usage overages are excluded; only contracted recurring value counts. Every seat is weighted equally, whether it sits in a premium account or an entry-tier one.
Why it matters
CARR ARPU is a forward-looking read on the quality of your bookings. Because it is built on contracted (signed) revenue rather than live billing, it shows the per-seat economics of what you have already won but not yet recognized — a leading indicator of where live ARPU is heading. Sales leaders use it to see whether new logos and expansions are landing at premium, standard, or discount pricing relative to the installed base. Finance uses it to forecast ARPU as the backlog activates. Product and pricing teams use it to catch compression early or confirm that an upmarket motion is working. A CARR ARPU sitting well above live ARPU signals that richer deals are queued and waiting to convert.
How to read it
Read CARR ARPU against live ARPU, not in isolation. When CARR ARPU is higher than live ARPU, your contracted book is priced richer than what is currently billing — a sign of pricing power, premium-tier landings, or expansion in the pipeline. When it sits below live ARPU, new bookings are cheaper than the base: discounting, a shift toward lower tiers, or an SMB push. The gap between the two is the signal; track it over time. Rising CARR ARPU period over period means new deals are improving per-seat economics; falling CARR ARPU means compression or a mix shift to lower-value cohorts. Pair it with live ARPU and ACV trends to diagnose whether the bookings engine is getting better or worse.
What good looks like
Good
CARR ARPU rising period over period and sitting at or above live ARPU, with the contracted backlog converting to live ARR on schedule.
Watch
CARR ARPU flat or propped up by a few large signed deals, or a CARR-minus-live-ARR gap that keeps widening as activation stalls.
Bad
CARR ARPU falling — new bookings priced below the installed base — signaling discounting, tier downshift, or compression in the contracted book.
Watch-outs
- Reading CARR ARPU as live value. Contracted revenue is not yet recognized, and not every contract activates at its signed value — failures, downgrades, and delays erode it. CARR ARPU is a forward estimate, not a current state; pair it with activation velocity and live ARPU to track how accurate it proves.
- Ignoring the activation gap. A high CARR ARPU alongside a widening CARR-minus-live-ARR gap means contracts are stuck in onboarding or trials. If the backlog builds but does not convert, you have a delivery problem, not a sales win — monitor the gap as closely as the CARR ARPU level itself.
- Mistaking the average for pricing power. CARR ARPU is a blended average: $5K could come from 80 seats at $5K, or from 50 seats at $8K plus 30 at $2K. The headline number hides mix shift — segment CARR ARPU by tier or account size to see compression or upmarket motion.
- Failing to annualize multi-year contracts. A two-year deal signed at $24K is $12K of CARR, not $24K. If you book the full contract value, CARR ARPU spikes when you sign long-term deals and collapses when they renew — always annualize before dividing by seats.
Worked example
Hypothetical
You close May with 80 active user seats and $160K of live ARR, for a live ARPU of $2K per seat. You have also signed $240K of new contracts and expansions that have not yet activated, bringing total CARR to $400K. CARR ARPU is $400K ÷ 80 = $5K per seat. The premium is healthy: your contracted book ($400K) is richer per seat than what is billing today, signaling upsells and new logos landing at premium tiers. As those contracts activate over the next two months, live ARPU should climb toward CARR ARPU — assuming no discount erosion or delivery slips.
Variants & windows
The same metric re-expressed by a mechanical transform — a trailing window, a growth rate, a per-unit scaling, or a book/segment cut. Each is computed from Contracted Average Revenue Per User above.
- CARR ARPU Growth Rate Growth rate
- CARR ARPU New New
- CARR ARPU New Growth Rate New · Growth rate
- CARR ARPU New T3M New · Trailing 3-month
- CARR ARPU New T3M Growth Rate New · Growth rate · Trailing 3-month
- CARR ARPU New TTM New · Trailing 12-month
- CARR ARPU New TTM Growth Rate New · Growth rate · Trailing 12-month
- CARR ARPU T3M Trailing 3-month
- CARR ARPU T3M Growth Rate Growth rate · Trailing 3-month
- CARR ARPU TTM Trailing 12-month
- CARR ARPU TTM Growth Rate Growth rate · Trailing 12-month