The average annualized revenue value of a single customer contract, commonly used in B2B SaaS to normalize deals of different lengths (monthly, annual, multi-year) into a consistent yearly figure.
Why it matters
ACV lets a business compare and aggregate deals signed on different terms on a like-for-like basis, and is often a key input into calculating metrics like CAC payback period and sales efficiency.
In a sentence
"Enterprise deals have a much higher ACV than self-serve, which is part of why the two segments have very different acceptable CAC thresholds."
Related terms
- Often confused with: TCV (ACV normalizes a contract to its annual value regardless of length; TCV, or total contract value, is the full value of the deal across its entire term — a three-year deal with a $30K ACV has a TCV of $90K).