What is an annual contract value

Annual contract value (ACV) is a SaaS metric that breaks down the total value of a customer's contract into an average value per year. Specifically, it normalizes the total value of the contract over its lifespan to show you the average revenue you get from that subscription agreement each year.

How do you calculate annual contract value?

The formula to calculate annual contract value (ACV) is calculated by dividing the normalized total contract value (TCV) and dividing by the contract term length. Normalized in this context means that one-time fees are removed.

What is the contract value?

Contract Value: What is Contract Value? A contract value is essentially the price tag that a government contract is worth in terms of dollars. Government contracts can have values ranging anywhere from several hundred dollars to multi-million dollars.

What's the difference between ACV and ARR?

Annual Contract Value vs ARR: Understanding the Difference\n\n Though ACV and ARR both measure revenue on an annual basis, there is one crucial difference between these two revenue metrics: ACV measures a single account; ARR measures all accounts at the same time.

Is contract value the same as revenue?

Put plainly, Total Contract Value (TCV) is the total amount of revenue you receive from a given customer. It includes all recurring subscription revenue as well as one-time fees that may be associated with the contract, such as implementation fees.