ACV Growth Rate
Date created: Oct 12, 2022 • Last updated: Oct 12, 2022
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.
ACV Growth Rate Formula
How to calculate ACV Growth Rate
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%.
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How to visualize ACV Growth Rate?
Growth Rates are best visualized with line charts. This lets you identify where your ACV Growth Rate has increased or decreased, allowing you to act on discrepancies.
ACV Growth Rate visualization example
ACV Growth Rate
ChartMeasuring ACV Growth Rate
More about ACV Growth Rate
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.