Annual Contract Value (ACV) is the average revenue you expect to earn from a customer over the course of one year. It’s a common metric in subscription-based and B2B SaaS businesses, especially when customers sign multi-year contracts.
ACV helps you understand how valuable each customer is on an annual basis — which is useful for forecasting revenue, prioritizing accounts, and measuring growth.
Example:
Let’s say a company signs a 3-year contract worth €90,000 total. The ACV would be €30,000 per year. If another customer signs a 1-year contract for €10,000, their ACV is also €10,000.
ACV is different from Total Contract Value (TCV), which looks at the full amount over the entire contract period. Focusing on ACV gives you a consistent way to compare accounts and track recurring revenue year over year.