ACV = Total value of all contracts/number of years

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Sales representatives can use ACV to identify high-value customers and strategize how to retain them during contract extension negotiations.
Sales managers may need ACV to monitor individual sales rep performance and tweak training efforts as needed.
CFOs or other C-suite executives can use ACV to improve timing and projections around annual budgets and future revenue forecasts.
How to calculate sales ACV
ACV is an average value you can calculate when you know the total value of a customer’s contract and the number of years it will be active.

Depending on your preference, you can add one-time some tips for running a successful telemarketing business purchases to the total value, although many companies leave those out and only use the income generated by recurring subscriptions.

For example, if Person A takes a SaaS annual subscription contract active for four years, and the total value of the contract is $120,000, then you can calculate the ACV like so:


= 120,000 ÷ 4

= $30,000

If your customer takes a monthly subscription contract, you can still calculate ACV, but you first need to calculate the annual value by multiplying the monthly subscription fee by 12.

Person B, for example, takes a monthly subscription, paying $60 per month for a 3-year contract. To get the ACV of person B, first calculate the annual subscription value and then multiply it by 3 to get the total contract value.