ACV (Annual Contract Value)
The average annual value of customer contracts, normalized to a one-year period.
Definition
ACV represents the annual value of a customer contract, excluding any one-time fees. It helps businesses understand the annual recurring value from each customer relationship.
How to Calculate
ACV = Total Contract Value / Contract Length (Years)
Real-World Example
Enterprise Deal: 3-year contract worth $150,000 total
ACV = $150,000 / 3 years = $50,000