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Packaged water (as either refill, bottled, or sachet water) has become an important element of water security in many low- and middle-income countries, owing to poor reliability and lack of piped water infrastructure. However, over time and across countries, the Demographic and Health Surveys monitoring program has inconsistently classified packaged water components as either improved or unimproved. Using data collected as part of the Performance Monitoring and Accountability 2020 (PMA2020) surveys on water options in nine study geographies across eight countries, we identified five geographies where packaged water constituted one of several options for 5% or more of users. In this study, four scenarios were designed in which packaged water components were variously classified as either improved or unimproved. Unimproved water use was highest in scenarios where sachet or refill water was classified as an unimproved source. Across the four scenarios, the difference in the use of unimproved water as the main option was highest (65%) in Nigeria (Lagos). That difference increased to 78% when considering all regular options. The development of these scenarios highlights the importance of classifying a source as improved or unimproved in the overall metric that indicates progress at national and international levels.