ACV (Annual Contract Value)
The annualized revenue value of a single customer contract, excluding one-time fees. ACV is used in enterprise SaaS to measure deal size and compare sales performance.
What Is ACV?
ACV (Annual Contract Value) is the annualized revenue value of a single customer contract, excluding one-time fees like setup or implementation charges. ACV is primarily used in enterprise SaaS to measure deal size, compare sales rep performance, and segment customers by value.
ACV vs. ARR: What Is the Difference?
ARR is the total annualized recurring revenue across all customers. ACV is the annualized value of a single contract. ARR is the sum of all your ACVs. ACV is useful for evaluating deal quality and sales efficiency, while ARR gives the full picture of your revenue base.
How ACV Impacts Your SaaS Business Model
Higher ACV typically means fewer customers needed to hit revenue targets, but also longer sales cycles and higher customer acquisition costs. Companies with ACV under $5K usually rely on self-serve or inside sales. ACV between $5K-$50K suits inside sales teams. ACV above $50K typically requires field sales and enterprise motions.
