The average annualized revenue per customer contract. Excludes one-time fees like implementation or training.
Why it matters: ACV helps dictate your sales motion. A low ACV requires high-volume, low-touch sales, while a high ACV can support enterprise, high-touch sales teams.
In practice: A customer signs a 3-year deal for $30,000. The ACV is $10,000. If they also pay a $5,000 setup fee, the ACV remains $10,000.