Annual Contract Value (ACV) is the annualized revenue value of a single customer contract, calculated as total contract value divided by contract length in years. It's used to benchmark individual deal sizes, sales rep productivity, pricing strategy, and customer-segment economics in B2B SaaS. ACV is the per-contract counterpart to [ARR] (which aggregates ACV across all contracts) and the annualized companion to [TCV] (the multi-year total).
The math:
ACV = Total contract value ÷ Contract length in years
| Contract example | TCV | Length | ACV |
|---|---|---|---|
| 1-year deal at $24K | $24K | 1 year | $24K |
| 2-year deal at $80K | $80K | 2 years | $40K |
| 3-year deal at $300K | $300K | 3 years | $100K |
| 1-year deal at $5K | $5K | 1 year | $5K |
ACV vs other r...