Definition
The average annualized value of closed customer contracts.
Formula
Total annualized contract value / Number of contracts closed
How to measure
Annualize the value of every contract closed in a period, then divide by the number of contracts.
Why track it
Tracking ACV trends shows whether a company is moving upmarket into bigger deals or downmarket into smaller, higher-volume ones.
Example
A company closing $2.4 million across 20 annual contracts reports a $120,000 ACV.
FAQ
- What is Average Contract Value?
- The average annualized value of closed customer contracts.
- How do you calculate Average Contract Value?
- Total annualized contract value / Number of contracts closed
- Why track Average Contract Value?
- Tracking ACV trends shows whether a company is moving upmarket into bigger deals or downmarket into smaller, higher-volume ones.