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ACV

Metrics beginner FOUNDERCFO

What is ACV?

ACV is annual contract value, the annualized revenue value of a customer contract.

Also known as: Annual Contract Value

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Common Mistakes with ACV

  • Not knowing your unit economics (CAC, LTV, ARPA, ACV, churn, payback months) — teams that cannot quote these numbers under-invest in sales and marketing (typically 10-25% of revenue) and never master paid acquisition or outbound prospecting.

ACV vs Related Metrics

ACV FAQ

What is the meaning of ACV in SaaS?

In SaaS, the meaning of ACV is the average annualized value of a single customer contract — a multi-year deal's total value divided by its number of years. It is often compared with ARR, which sums recurring revenue across all customers.

More questions? See the full ACV FAQ.

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Related Concepts

Built from

  • ARPA — ARPA is average revenue per account, the average recurring revenue generated per customer…

Related terms

  • CAC — CAC is customer acquisition cost, the sales and marketing investment required to acquire c…
  • Outbound Sales — Outbound Sales is a sales motion where the company proactively prospects and reaches out t…
  • Customer Churn — Customer Churn measures the percentage of customer accounts lost over a given period.
  • LTV — LTV is customer lifetime value, the estimated revenue value of a customer over their lifes…
  • Account Retention — Account Retention measures the share of customer accounts that remain active over a period…
  • Product Led Growth — Product Led Growth is a go-to-market motion where product usage and user experience drive…
  • Organic Search — Organic Search is customer acquisition from unpaid search engine visibility.