Revenue

Annual Contract Value (ACV)

ACV refers to the total value of a customer's annual contract or subscription with a business, regardless of the contract's duration. It is a metric used to estimate revenue and gauge customer value.

Arbo Team
Jul 18, 2023

What is it: ACV refers to the total value of a customer's yearly contract or subscription with a business, regardless of the contract's duration. It is a metric used to estimate revenue and gauge customer value.

Why is it important: ACV is an essential metric for businesses that sell subscription-based products or services. It can help businesses estimate their future revenue and gauge their customers' value.

Formulas: Yes, there is a formula associated with ACV. The formula follows: ACV = (Total contract value) / (Number of years in contract)

How can this be used for startups: Startups can use ACV to track revenue growth and measure customer value. ACV can also be used to set pricing for subscription-based products or services.
Revenue

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