Metrics
Annual Contract Value (ACV)
The yearly revenue value of a single customer contract, normalised across term length.
What is annual contract value?
ACV is the yearly value of one customer contract. For a three year deal worth 90,000, the ACV is 30,000. It normalises deals of different lengths so you can compare them.
Why ACV decides whether outbound makes sense
Researched outbound costs real money per conversation. That cost only clears if a won deal is worth enough.
// OUTBOUND VIABILITY BY ACV
under 5k: outbound rarely clears, use product-led or inbound
5k to 15k: viable with tight targeting and short cycles
15k to 50k: outbound is usually the strongest channel
above 50k: outbound plus multi-threading, expect long cycles
ACV for dev agencies
Agencies often think in project value rather than ACV. Convert it. A 120,000 build delivered over eight months is an ACV of roughly 180,000 annualised, which comfortably supports outbound investment and explains why agencies see faster payback than SaaS.
Raising ACV instead of volume
Doubling ACV halves the number of customers you need for the same revenue. For most teams, moving upmarket by one company size band is easier than doubling reply rate.
Related reading: Customer Acquisition Cost and Revenue Per Rep.
Frequently Asked Questions
- What ACV do you need for outbound to be worth it?
- Roughly 15,000 and up is where researched LinkedIn outbound clearly clears its cost. Between 5,000 and 15,000 it works with tight targeting and short sales cycles.
- How do you calculate ACV for a multi-year deal?
- Divide the total contract value by the number of years. A 90,000 three-year contract has an ACV of 30,000.