Sales Glossary > Annual Contract Value

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

Related terms:

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.

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