GTM Glossary · Metrics
Annual Contract Value (ACV)
The normalised yearly value of a customer contract, excluding one-off fees.
[01]What It Means
ACV converts contracts of different lengths into a comparable annual figure, which makes cohorts, segments, and markets measurable against each other. Multi-year deals are divided by term; setup and services are usually reported separately.
[02]Why It Matters
ACV decides which motion is affordable. Below roughly ten thousand euros, a senior multi-touch European motion rarely pays for itself; above it, seniority and patience become the cheapest path to revenue.
[03]Where It Goes Wrong
Mixing one-off implementation revenue into ACV and overstating recurring value.Comparing ACV across markets without adjusting for local pricing and discount norms.Chasing ACV growth by discounting term length, which weakens cash and retention signals.
[04]Related Terms