--- title: "Average Contract Value: Definition + Calculation | Jirav" description: ACV calculates the average revenue generated per customer over a given period of time. With ACV, you can make informed decisions about pricing and more. --- ![](https://www.jirav.com/hs-fs/hubfs/Imported%20sitepage%20images/header-logo.png?width=98&name=header-logo.png) - [ Resources ](https://www.jirav.com/resources) - Menu / Resources - [Resource Center ](https://www.jirav.com/resources) Blogs and resources on all things finance, FP&A, and Jirav [Webinars ](https://www.jirav.com/webinars) Learn more about Jirav and FP&A from industry experts [Events ](https://www.jirav.com/events) See our upcoming calendar of events [Help Center ](https://help.jirav.com/) Guide on how to use Jirav - [ Company ](https://www.jirav.com/company) - Menu / Company - [About ](https://www.jirav.com/company) Learn about Jirav’s story and meet our leadership team [News Coverage ](https://www.jirav.com/news) See the latest news and highlights [Press ](https://www.jirav.com/press-releases) Recent company announcements and updates [Careers ](https://www.jirav.com/careers) View current job openings and learn how to join the Jirav Tower ![business_env](https://www.jirav.com/hubfs/business_env.svg) [ For Businesses ](https://www.jirav.com/reporting-planning-purpose-built-for-businesses) ![accounting_calc](https://www.jirav.com/hubfs/accounting_calc.svg) [ For Accounting & CFO Firms ](https://www.jirav.com/reporting-planning-purpose-built-for-accounting-cfo-advisory-firms) [ Get a Demo ](https://www.jirav.com/request-demo) [ Sign in ](https://app.jirav.com/) ![](https://www.jirav.com/hubfs/April2021/images/banner-shap.png) BLOG # Average Contract Value: Definition + Calculation | Jirav [![](https://www.jirav.com/hubfs/April2021/images/fb-icon.png) ](http://www.facebook.com/share.php?u=https://www.jirav.com/saas-metrics-library/average-contract-value//) [![](https://www.jirav.com/hubfs/April2021/images/tw-icon.png) ](https://twitter.com/share?url=https://www.jirav.com/saas-metrics-library/average-contract-value//) [![](https://www.jirav.com/hubfs/April2021/images/in-icon.png) ](http://www.linkedin.com/shareArticle?mini=true&url=https://www.jirav.com/saas-metrics-library/average-contract-value//&summary=&source=CeBIT) 1 minute read ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) ### What is ACV? ACV is a metric that calculates the average revenue generated per customer over a given period of time. It represents the average value of a single contract or subscription, regardless of whether it's paid monthly, annually, or on a different billing cycle. ACV helps you understand the revenue potential of your customer base and provides insight into the effectiveness of your pricing strategy. It's important to note that ACV is not the same as Monthly Recurring Revenue (MRR). MRR is a metric that measures the amount of revenue generated from your recurring subscriptions each month, whereas ACV looks at the average value of a single contract or subscription over a longer period of time, like a year. ### Why ACV Is Important ACV is a key performance indicator that SaaS companies use to measure and forecast revenue. By understanding your ACV, you can make more informed decisions about your pricing and marketing strategies, as well as your overall business model. ACV provides insights into the effectiveness of a company’s pricing strategy. By tracking ACV over time, you can see how changes to your pricing model impact revenue. This information can help you optimize your pricing strategy to maximize revenue. ACV also provides a baseline for predicting future revenue. By knowing your ACV and how it changes over time, you can make more accurate revenue forecasts and better plan for growth. ### How to Calculate ACV To calculate ACV, you need to know two things: the total contract value and the number of contracts or subscriptions sold. Here's the formula for calculating ACV: ACV = Total Contract Value / Number of Contracts For example, let's say your company has sold 100 annual subscriptions and the total contract value is $120,000. ACV = $120,000 / 100 = $1,200 This means that the average annual contract value for each of your customers is $1,200. ##### Jirav Published April 25, 2023 ###### Related topics - [Metrics library](https://www.jirav.com/saas-metrics-library/tag/metrics-library) - [Saas metrics library](https://www.jirav.com/saas-metrics-library/tag/saas-metrics-library) ## Related blog posts ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Average Revenue Per Account (ARPA) Formula | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/average-revenue-per-account) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Churn Rate: What It Means & How to Calculate It | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/churn-percentage/) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Customer Growth Rate: What it is & Why it Matters | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/customer-growth-percentage) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### What is Expansion Rate & Why Does it Matter? | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/expansion-percentage/) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Gross Revenue Retention: Meaning & How to Calculate | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/gross-revenue-retention/) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Net Revenue Retention: What it Is & How To Calculate | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/net-revenue-retention/) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### ARR Growth Rate Explained & Why It's Important | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/annual-recurring-revenue-growth-percentage) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### Customer Lifetime Value (LTV) Explained + Formula | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/customer-lifetime-value) ![](https://www.jirav.com/hubfs/April2021/images/Resources-tile-pattern-giraffe@2x.png) Metrics library #### What is Downgrade MRR Rate & How to Calculate It | Jirav [ Read more ](https://www.jirav.com/saas-metrics-library/downgrade-percentage) [Load more](##) ## Let’s get started! 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