Glossary / Average Contract Value

Average Contract Value

Average Contract Value (ACV) is a metric used to measure the average value of contracts signed by a company over a specific period of time. It is calculated by dividing the total value of all contracts signed during that period by the number of contracts signed. The formula for calculating ACV is: ACV = Total Contract Value / Number of Contracts For example, if a company signs 10 contracts with a total value of $1,000,000, the ACV would be: ACV = $1,000,000 / 10 = $100,000 ACV is often used by sales and marketing teams to understand the average revenue generated per contract and to track the performance of their sales efforts. It can also be used to forecast future revenue and make strategic decisions regarding pricing, product offerings, and customer segmentation.