Annual contract value (ACV)

Ah, annual contract value, the magical number that tells you how much a client is shelling out each year for your fabulous services. Think of it as the gold sticker on your sales report – it sums up all those monthly payments so you can pretend to make it rain with predictable revenue. It's basically your company's way of saying, "Look, Ma! No surprises... unless the client cancels."

Annual Contract Value (ACV) is a financial metric utilized primarily in subscription-based businesses to evaluate and standardize the revenue generated from customers over a year. ACV provides companies with insights into how much predictable income they can expect annually from each customer account, excluding one-time fees and upfront costs. This metric is essential for forecasting and setting revenue goals, as it allows businesses to assess the average value contributed by each client. ACV is also instrumental in calculating other key performance indicators, such as Customer Lifetime Value (CLV) and churn rate, thereby aiding in strategic decision-making and long-term planning.