Frequently asked questions
How is ACV different from ARR?
ACV is one customer's annualized contract value; ARR is the total across all customers. ACV measures deal size; ARR measures company scale. Reports that confuse them usually overstate company growth.
What's a healthy ACV trend for B2B SaaS?
Growth in ACV reflects either better targeting (closing larger accounts) or expansion (selling more to existing accounts). A flat or declining ACV with rising customer count usually means you're winning smaller deals than you used to.
Should ACV include one-time fees and services?
Most operators exclude one-time fees and services. ACV measures recurring revenue per account. Include only what renews automatically; treat implementation and services separately so the metric stays comparable across periods.
What ACV band defines mid-market vs enterprise deals?
Loose convention: under $25K ACV is SMB, $25K to $100K is mid-market, $100K+ is enterprise. The exact thresholds vary by category but the sales motion shifts noticeably at each boundary.
How does ACV affect sales motion design?
Higher ACV justifies more rep touchpoints, longer cycles, and in-person meetings. Below $25K ACV, the math typically only works with self-serve or SDR-led closing. Full AE cycles cost more than the contract is worth.
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