Sales Terms

Annual Contract Value (ACV)

Annual contract value is the dollar amount of an agreement between a company and customer in 1 year.

What's Inside

    What is Annual Contract Value?

    Annual contract value is the dollar amount of an agreement between a company and customer in 1 year. It's used by businesses to help them understand how many sales they've made during a period of 1 year, so that executives have accurate information for budgeting purposes.

    It takes into account all of the sales and renewal contracts for each account, as well as any other recurring payments or service agreements with the customer.

    It can also be defined as the annualized sales volume under a single agreement.

    Example

    If your customer typically signs up for a $50/month plan with their initial purchase, then the annual contract value would be 50 x 12 = $600 at the end of one year (12 months).