Annual Contract Value
The Annual Contract Value (ACV) is the total annualized revenue per customer contract.
Although it is often considered a “vanity metric,” you should still monitor the ACV among other sales KPIs to make decisions regarding your sales and marketing strategy.
Here’s a formula to calculate it:
ACV = Total value of contracts / Number of contracts within the given period
Most SaaS businesses, depending on their typical contract length, also keep track of the Average Contract Value – the average cost or customer contract per year.
Average Purchase Value (APV) is a synonym for ACV used mostly in retail.
Similarly, Average Order Value (AOR) is typically applied to eCommerce sales.