Annual Contract Value (ACV)
Annual Contract Value (ACV) is a metric used to assess the average yearly revenue generated by a single customer contract. It helps businesses understand the annualized worth of their customer base, focusing on recurring revenue streams.
What is Annual Contract Value (ACV)?
Annual contract value (ACV) is a metric used primarily in subscription-based businesses and contract-based services to represent the average annual revenue generated from a single customer contract. It helps companies understand the revenue potential and profitability of their customer agreements on an annual basis.
ACV excludes one-time fees like setup costs or onboarding charges and it represents the ongoing value a customer brings each year. By looking at ACV, businesses can compare the value of different customers or contracts, even if they have varying lengths or pricing structures.
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