Annual Contract Value (ACV)

Annual contract value (ACV) is the average annualized revenue from a single customer contract, excluding one-time fees. If a customer signs a three-year deal worth $90,000 plus a $6,000 setup fee, the ACV is $30,000 — the recurring amount normalized to one year. ACV differs from ARR, which sums recurring revenue across all customers, and from ARPA, which averages across your whole base rather than per contract. Why it matters: ACV tells you the size of the deals you're winning, which shapes your entire go-to-market. A low ACV (say $500) demands a self-serve, product-led motion because you can't afford a salesperson per deal; a high ACV ($50,000+) can justify outbound sales, demos, and a longer cycle. Practical note: track ACV trends over time — rising ACV signals you're moving upmarket to larger customers, while flat ACV with more logos means you're scaling horizontally. Blending very different deal sizes into one average can hide this, so segment before you decide.