Annual Contract Value (ACV)

Annual contract value, or ACV, is the recurring revenue a single customer contract is worth over one year, averaged out if the deal runs longer. A three-year deal worth 90,000 has an ACV of 30,000. It strips a contract down to its yearly run-rate so you can compare deals of different lengths on equal footing.

ACV shapes how you should sell. A low ACV means you need a high-volume, low-touch motion, because no single deal can support a long sales process or hands-on onboarding. A high ACV justifies demos, custom proposals and a real salesperson, because each win pays for that effort. For a founder, knowing your ACV stops you from running an expensive enterprise sales motion on deals too small to support it, or leaving valuable accounts under-served with self-serve tools. It is also the figure that connects directly to your acquisition budget: your ACV sets the ceiling on what you can sensibly spend to win each customer.