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ACV Growth Rate

What is ACV Growth Rate?

ACV Growth Rate is the change in the average contract value over a given time period when compared to the previous time period, typically represented by a percentage.

Alternate names: Annual Contract Value Growth Rate

How to calculate ACV Growth Rate

ƒ (Sum(ACV end of period) – Sum(ACV beginning of period))/Sum(ACV beginning of period)
ƒ (Sum(ACV end of period)/Sum(ACV beginning of period) - 1)

Example

A SaaS company had an ACV of $40,000 at the beginning of last year. By strategically upselling, the company brought the ACV up to $60,000 at the end of the year. This means that the company’s ACV Growth Rate in this scenario is ($60,000 - $40,000) / $40,000 which is 50%.

More about this metric

Annual Contract Value (ACV) is the total amount of money an average customer contract is worth in one year. It may or may not include calculation of set up fees, installation, etc. depending on the convention followed by the company. ACV Growth Rate measures the percentage change in this metric over a period of time.

Track your ACV Growth Rate as an indicator of how successful your up-sell strategies are, or your ability to increase pricing with new customers.. It’s also important to track ACV and ACV Growth Rate alongside other metrics such as CAC and ARR, or segmented by customer segments, to get a fuller picture of the profitability of your business.

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