What is the difference?

# ACV vs ARPA

Annual Contract Value

Average Revenue Per Account

#### What is it?

Annual Contract Value (ACV) 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.

#### 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 First Year Annual Contract Value = ( (30,000 x 30) + (40,000 x 30) + (50,000 x 40) ) / 100 customers Year 1 ACV = \$41,000 Second Year Annual Contract Value = ( (30,000 x 30) + (40,000 x 30) ) / 60 customers Year 2 ACV = \$35,000 Third Year Annual Contract Value = (30,000 x 30) / 30 customers Year 3 ACV = \$30,000

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: Oct 12, 2022

Latest update: Mar 31, 2023

Date created: Oct 12, 2022

Latest update: Oct 12, 2022