Annual contract value, or ACV, is the yearly recurring revenue value of a customer contract. It helps SaaS teams compare customers, segments, and sales motions with different billing schedules.
Formula
ACV = Total recurring contract value / Contract term in years
ACV matters because acquisition cost, implementation effort, retention, and expansion all behave differently at different contract sizes. Use ACV with SaaS CAC payback benchmarks and SaaS net revenue retention benchmarks.
Related calculator: Annual Contract Value Calculator.