Annual Contract Value (ACV)

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.