Average Contract Value
Definition
Average Contract Value: Average Contract Value (ACV) is the average annual revenue per contract, typically used for B2B subscription businesses. It's calculated by dividing total contract value by contract length in years. ACV helps compare deals and segment customers.
Example Usage
“Moving upmarket increased our ACV from $5K to $25K, changing our sales motion significantly.”
Common Misconceptions
Related Terms
Annual Recurring Revenue
Annual Recurring Revenue (ARR) is the yearly value of recurring subscription revenue, calculated as MRR multiplied by 12. ARR is the primary metric fo...
Enterprise Sales
Enterprise sales involves selling to large organizations with deal sizes typically exceeding $100K annually. These sales feature long cycles, multiple...
Sales Cycle
The sales cycle is the time from first contact with a prospect to closing the deal. It includes stages like prospecting, discovery, demo, proposal, ne...
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