← All MetricsKey Metric

ACV

Annual Contract Value — the average annualised revenue value of a customer contract, normalising multi-year deals to a per-year amount.

What it shows

ACV indicates deal size and segment mix. Tracking ACV over time shows whether the business is moving upmarket or downmarket. Comparing ACV to CAC reveals the unit economics of each deal — a $10K ACV deal with a $15K CAC is economically unsustainable.

Formula

ACV = Total Contract Value ÷ Contract Length in Years. A $300K, 3-year deal: ACV = $100K. A 1-year deal's ACV equals its TCV.