What is the difference?

ACV vs ARPA

Annual Contract Value

Average Revenue Per Account

What is it?

Annual Contract Value is the dollar amount an average customer contract is worth to your company in one year. There tends to be less universal consensus on the definition of ACV compared to some other SaaS metrics, such as Annual Recurring Revenue. For example, some companies include one-time initial charges like setup or training in their ACV calculations, while others don’t.

Average Revenue Per Account (ARPA) is the average revenue generated per account per year or month. It is used as an indication of revenue generation capability and the ability to meet targets.

Formula

ƒ Sum(Value of all Customer Contracts for 1 year) / Count(# of Customers under Contract)
ƒ Sum(Revenue) / Count(Accounts)

Example

You have 100 customers. 30 signed a 3-year contract with a contract value of $90,000, equivalent to $30,000 / year. 30 signed a 2-year contract with a contract value of $80,000, equivalent to $40,000 / year. 40 signed a 1-year contract with a contract value of $50,000, equivalent to $50,000 / year Annual Contract Value = ( (30,000 x 30) + (40,000 x 30) + (50,000 x 40) ) / 100 customers ACV = $41,000

Consider a company has 1000 accounts and is generating $100,000 in revenue per month. Average Revenue per Account would be, ARPA = $100,000 / 1000 = $100 per account per month

Published and updated dates

Date created: May 20, 2020

Latest update: Apr 9, 2021

Date created: Apr 28, 2018

Latest update: Aug 7, 2020