Annual Contract Value (ACV)

Annual Contract Value (ACV)

Definition: ACV is the average annualized revenue per customer contract, excluding one-time fees.

How It’s Used:

• Measures the value of customer contracts for SaaS and subscription businesses.

• Useful for sales forecasting and performance benchmarking.

Formula:

ACV = Total Contract Value / Number of Years

Example: A 3-year contract worth $60,000 has an ACV of $20,000.