What is ACV (Annual Contract Value)?
Annual Contract Value (ACV) is a metric that calculates the worth of a customer agreement over a 12-month period. It's prevalent in the software-as-a-service industry and is calculated by dividing the total revenue earned from a customer contract over one year by the number of customers.
This metric helps to determine the revenue per customer and to comprehend the average value of a customer contract. It is also utilized to evaluate customer agreements of different sizes and to gauge the effectiveness of sales and marketing strategies.