All termsFINANCE & PRICING

ACV

Annual Contract Value

Also known as: Annual Contract Value

DEFINITION

The average annualised revenue per contract — used to compare deals across customers regardless of contract length.

In depth

ACV normalises contract size. A three-year contract worth $300K has an ACV of $100K. It's the denominator investors use to bucket SaaS companies (SMB = <$10K ACV, mid-market = $10–100K, enterprise = $100K+).

ACV and ARR can diverge sharply for companies with many multi-year contracts — ACV tells you average deal size, ARR tells you the current revenue run rate.

Formula & example

ACV = Total Contract Value ÷ Contract Years

Related terms

ARR

The yearly version of MRR — the total recurring subscription revenue a SaaS would earn over 12 months at today's run rate.

ARPU

The average monthly revenue a SaaS earns per active customer.

TCV

The total revenue a signed contract will generate over its full duration, including discounts, services, and any committed add-ons.

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Last reviewed 14 April 2026 by Abhi Verma.