What is annual contract value?

ACV or annual contract value is a metric that measures an average annual value of signed contracts. In the case of subscription-based SaaS businesses, annual contract value indicates an average yearly value of overall subscription agreements.

Annualized contract value alone is not a vital metric. However, when compared to other metrics such as Customer Acquisition Cost, it becomes very important and allows businesses to learn how long it will take to pay back the money they spent to acquire a customer.

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