Definition
Annual Contract Value (ACV) represents the annualized revenue generated from a customer contract, often used in subscription-based or SaaS businesses.
Related Services
ACV is utilized in financial forecasting, revenue analysis, and customer value assessments. It is a key metric in subscription sales and account management.
Problem and Application
A challenge with ACV is accurately accounting for variable pricing, add-ons, or upgrades during a contract term. Businesses use ACV to measure growth, predict revenue, and guide customer retention strategies.
Conclusion
ACV is a critical metric for understanding customer revenue on an annual basis, helping businesses forecast income and evaluate customer value effectively.
