Learn more about common financial (and startup) terms here. To learn more about Pilot, fill out the form below.
Your annual contract value (ACV) tells you the annual value of each customer or account regardless of the contract’s length. You can use your ACV to estimate how much you’ll earn from each new customer and how many customers you’ll need to reach your revenue goals.
You can compare ACVs and customer acquisition costs (CACs) to determine whether a customer will be profitable during their first year. You can also compare the ACV of different types of accounts or customers to identify which ones may be most profitable.
A higher ACV isn’t necessarily better — you need to consider the number in context. For example, some B2C companies have low ACVs and a large potential market, while a B2B company might focus on selling high-cost subscriptions to a few target customers.
ACV differs from your annual recurring revenue (ARR) because ARR uses standardized inputs and calculations. For example, ARR does not include one-time charges and only includes contracts that have at least a 12-month term. Additionally, you generally use ACV to track the value of a single account (or average value of accounts), while ARR can show you the total value of your recurring revenue from subscriptions.
Pilot provides bookkeeping, CFO, and tax services for literally thousands of startups and growing businesses. We've successfully processed over 10 million transactions for our customers and have unparalleled expertise when it comes to helping businesses succeed.
We're the largest startup-focused accounting firm in the United States, and we'd love to help you. To talk to an expert on our team and find out what Pilot can do for you, please click "Talk to an Expert" below, or email us at info@pilot.com.
Get the peace of mind that comes from partnering with our experienced finance team.