Average CARR per User
The average annual contracted recurring revenue locked in per active user seat, measuring per-seat unit economics for user-based licensing models.
◆ Currency
Formula
Built from
What it measures
The contracted annual run-rate of all live recurring contracts, divided evenly across every active user seat under those contracts. Only seats on active, billing contracts are counted — churned, pending, and trial users are excluded, and one-time fees, services, and usage overages never enter the numerator.
Why it matters
For seat-based SaaS, this metric is the cleanest read on per-seat pricing power. Unlike Average Revenue Per User, which reflects revenue already recognized, it is built on contracted value — the annual revenue you have legally locked in before a single dollar is collected. That makes it a forward-looking gauge of monetization: it tells you whether each seat you sell is worth more this quarter than last, independent of when cash arrives or how churn is trending. Sales leaders use it to police discounting and seat-price erosion; finance uses it to model expansion potential per seat; investors read it as a proxy for pricing durability in the book of business.
How to read it
Read this metric as a trend, never as a single number, and always alongside its two components. Rising month over month means each seat is worth more — driven by price increases, tier migration, or premium-feature attach. Flat or falling while total CARR climbs means you are adding seats at lower prices or existing customers are downgrading — a mix shift you want to catch early. The component diagnosis is decisive: if CARR grew but per-user value fell, you bought growth with cheap seats; if per-user value grew but CARR fell, you lost seats while holding price. Compare it to your acquisition cost per seat to judge payback — a long payback is tolerable while growth is fast, but a warning sign in a mature book.
What good looks like
Good
Per-user contracted value rising or holding steady month over month, paired with net revenue retention above 110% — a sign that pricing power and expansion are both working.
Watch
Per-user value flat or slipping while total CARR still grows — a mix shift toward cheaper seats or quiet downgrades that erodes pricing power before it shows up in the top line.
Bad
Per-user value falling materially year over year — sustained seat-price erosion, down-tiering, or low-value acquisition taking over the book, and especially worrying when seat-level payback is stretching well beyond what your growth rate can support.
Watch-outs
- Including churned, pending, or trial seats in the denominator. Count only seats on active, billing contracts at period-end — padding the seat count silently depresses per-user value and breaks period-to-period comparability.
- Counting the same user twice across overlapping contracts. If one person is named on two contracts, decide once whether that is one seat or two, then apply the rule every period — an inconsistent convention makes the trend meaningless.
- Mixing time windows. A trailing-12-month figure and a single-month figure are different metrics; placing them side by side without labels invites false conclusions about momentum.
- Celebrating a spike without checking the components. A jump can simply mean a low-priced, high-seat customer churned out, shrinking the denominator — inspect CARR and the seat count separately before crediting better monetization.
Worked example
Hypothetical
You have three live contracts: Customer A at $30K/year for 10 seats, Customer B at $15K/year for 5 seats, and Customer C at $12K/year for 3 seats. CARR is $57K and total contracted users is 18, so each seat carries $3,167 of contracted annual value.
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 Average CARR per User above.
- Average CARR per User Growth Rate Growth rate
- Average New CARR per User New
- Average New CARR per User Growth Rate New · Growth rate
- Average New CARR per User T3M New · Trailing 3-month
- Average New CARR per User T3M Growth Rate New · Growth rate · Trailing 3-month
- Average New CARR per User TTM New · Trailing 12-month
- Average New CARR per User TTM Growth Rate New · Growth rate · Trailing 12-month
- Average CARR per User T3M Trailing 3-month
- Average CARR per User T3M Growth Rate Growth rate · Trailing 3-month
- Average CARR per User TTM Trailing 12-month
- Average CARR per User TTM Growth Rate Growth rate · Trailing 12-month