What Is ACV (Annual Contract Value)?
The average annualized revenue per customer contract.
The average annualized revenue per customer contract.
Annual Contract Value (ACV) is the average annualized dollar amount of a customer contract, excluding one-time fees. For SaaS companies with annual contracts, ACV equals the yearly subscription price.
ACV is especially important for enterprise SaaS companies where deal sizes vary significantly. Tracking ACV growth shows whether you're moving upmarket or successfully increasing pricing.
ACV differs from ARR in that ACV is a per-contract metric, while ARR is the sum of all active recurring revenue. Higher ACV generally means longer sales cycles but lower churn and higher LTV.
Formula
ACV = Total Contract Value ÷ Contract Term in Years
Example
A 3-year contract worth $90,000 has an ACV of $30,000.
Is your pricing page leaking upgrades?
Personalized report, 7-day refund. The $19 is credited toward the $299 Pricing Decision + Rewrite.
→ Get your Free Instant Pricing Page Score
Explore SaaSPriceLab
- Pricing calculators
- SaaS metrics calculators
- Churn & retention calculators
- Startup financial tools
- Founder decision tools
- Methodology & assumptions
- Free Instant Pricing Page Score
- Full sitemap
Is your pricing page leaking upgrades?
Personalized report, 7-day refund. The $19 is credited toward the $299 Pricing Decision + Rewrite.