ACV (Annual Contract Value)

Annual Contract Value (ACV) is a metric that represents the revenue a business expects to earn from a customer’s subscription or contract over one year. It standardizes income from recurring services, helping companies measure growth and performance. For example, if a customer pays $1,200 annually for a service, the ACV is $1,200. It excludes one-time charges or setup fees, focusing solely on the predictable, recurring revenue. ACV is useful for forecasting future income, setting sales targets, and understanding the value of customer relationships in subscription-based business models.