The Annual Contract Value, or ACV, is the annualized amount of a customer’s contract with your company; minus any one-time payments included in the contract.
For example, if you sold a three-year, $380,000 contract to a new customer, which included a one-time payment of $20,000 to onboard and set up your business, you would calculate your annual contract value (ACV) as:
(Total Value – One-Time Payment)/Contract Length in Years
(380,000-20,000)/3 = $120,000
Review our Glossary for additional key terms and metrics.
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