Annual contract value (ACV)

Annual contract value (ACV) is a revenue metric that measures the average annualized amount of revenue generated by each customer contract. It is commonly used by SaaS companies that have yearly or multi-year contracts with their customers. ACV can help to analyze the impact of sales and marketing initiatives, compare against other metrics such as customer acquisition cost (CAC) or annual recurring revenue (ARR), and forecast future revenue streams. ACV can be calculated by dividing the total contract value (TCV) by the number of years in the contract, or by multiplying the monthly recurring revenue (MRR) by 12, depending on how the contract is structured. ACV does not include one-time fees such as setup or implementation costs.