What is Average Contract Value (ACV)?
Average contract value (ACV) is the average annualized revenue per customer contract. It determines sales team structure, compensation, and go-to-market strategy.
ACV represents the average annual value of a customer contract, excluding one-time fees. It's one of the most important metrics for structuring a sales organization — companies with $5K ACV need a very different sales motion than those with $500K ACV.
ACV and Sales Team Structure
ACV dictates your sales model. Below $10K ACV: self-serve or inside sales. $10K-$50K: inside sales with SDR support. $50K-$250K: field sales with technical support. Above $250K: enterprise sales with solution engineers, executive sponsors, and extended sales cycles.
ACV vs ASP
ACV is the average annual contract value, while ASP (Average Selling Price) includes multi-year contracts at full value. A 3-year $150K contract has an ASP of $150K but an ACV of $50K. CROs use ACV for capacity planning and ASP for bookings targets.
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