ACV vs ARR
What is the difference between ACV and ARR? Side-by-side definitions, formulas, and benchmarks for two of the most-watched SaaS metrics.
Definitions
What is ACV?
ACV is annual contract value, the annualized revenue value of a customer contract.
What is ARR?
ARR is annual recurring revenue, the annualized subscription revenue base of a SaaS company.
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ACV vs ARR at a Glance
| ACV | ARR | |
|---|---|---|
| Category | Metrics | Metrics |
| Formula | — | ARR = MRR × 12 |
| Benchmarks | — | — |
| Calculator | — | ARR calculator |
When Each Matters
ACV and ARR answer different questions. ACV is annual contract value, the annualized revenue value of a customer contract. ARR is annual recurring revenue, the annualized subscription revenue base of a SaaS company. In practice, healthy SaaS operators watch both, because each one catches failure modes the other misses.