ACV

The average yearly revenue you earn from a single customer contract, excluding one-off fees. It normalises deals of different lengths to a per-year figure.

ACV helps you compare customers and forecast revenue consistently. It also guides how much you can sensibly spend to acquire each new customer.

A founder signs a client to a two-year deal worth £6,000 in total. The annual contract value is £3,000, which she uses to plan her sales targets.