Sales
Definition
Annual Contract Value is the value of a customer contract normalized to one year. For a 3-year $90k contract, ACV is $30k. ACV is the standard unit for comparing deals of varying contract lengths and forecasting sales performance.
Key points
- ACV normalizes multi-year deals for comparison
- Different from TCV (total contract value) which sums all years
- Used in sales compensation and quota setting
- New ACV vs expansion ACV track new-business vs growth separately
Example
A customer signs a 2-year deal at $48k total with year-1 at $24k and year-2 at $24k. ACV is $24k; TCV is $48k.
Stop stitching tools to track this
CRM, communications and operations share one database here, so the numbers this term describes are a dashboard rather than a spreadsheet.