What is an ACV (Annual Contract Value)?
Formula: Total Contract Value / Number of Contract Years
Measures the annual value of a subscription or contract normalized to a 12-month period. Important for B2B SaaS companies. For example, a 3-year contract worth $300,000 has an ACV of $100,000. Companies use ACV to standardize contract values across different terms.
Optimize ACV through strategic pricing, contract terms, and value-based selling. Focus on customer success, upselling opportunities, and long-term relationship building.
ACV growth is influenced by pricing strategy, contract duration, and customer expansion. Market conditions and competitive factors affect contract values.
Increase ACV through feature upgrades, service additions, and strategic account planning. Focus on customer value demonstration and relationship expansion.
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