ACV stands for Annual Contract Value, which is a sales metric used to measure the total value of customer contracts over a year. It is a crucial metric for measuring and understanding the worth of customer contracts, especially for SaaS companies that have yearly or multi-year contracts. ACV is calculated by multiplying the Monthly Recurring Revenue (MRR) by 12. ACV sales calculations are typically based on the recurring revenue generated by a single client or account and don’t normally include initial or one-time setup, training, or administrative fees.

ACV is used to measure the dollar value of all customer accounts, whether they involve new or existing customers. It is a normalized revenue metric that spans across multiple years. ACV is most valuable when its compared to other sales metrics and shouldnt necessarily be looked at individually. It is often used in conjunction with other metrics such as Total Contract Value (TCV), Customer Acquisition Cost (CAC), and Annual Recurring Revenue (ARR).

In summary, ACV is a sales metric that measures the total value of customer contracts over a year, and it is used to understand the worth of customer contracts, especially for SaaS companies. It is calculated by multiplying the Monthly Recurring Revenue (MRR) by 12, and it is often used in conjunction with other sales metrics.