What is Annual Contract Value?
Average annualized value of a customer contract.
How to calculate it
Calculate Annual Contract Value as: Total contract value / Contract years. Pull the inputs from your connected data and track the trend over time in your dashboard.
Examples
Example 1
A 2-year, $60,000 contract = $30,000 ACV. Use ACV to compare deals of different lengths on equal footing.
Example 2
A two-year, $60,000 contract -> $30,000 ACV, directly comparable to a one-year $30,000 deal despite the different term lengths.
Why it matters
Annual contract value (ACV) is the average annualized value of a customer contract and normalizes deals of different lengths for fair comparison. It is essential for comparing a one-year deal against a three-year one on equal footing. Including one-time fees inconsistently makes ACV comparisons unreliable.
Benchmark context
Compare ACV across segments and tiers rather than to an external benchmark; rising ACV usually reflects a successful move upmarket.
Common pitfalls
Including one-time fees inconsistently.
Related KPI guides
Turn KPI definitions into governed dashboards
Metricwise helps teams define metrics once, reuse them across dashboards, and ask trusted business questions in plain English.
Get Started