Glossary Term
Average Contract Value (ACV)
Definition
Average Contract Value (ACV) refers to the average revenue generated per contract or customer annually. In the MedTech industry, ACV is used to evaluate the financial performance of contracts, particularly in subscription-based models, service agreements, or multi-year deals.
Relevance to the MedTech Industry
ACV provides a key metric for assessing the profitability and value of customer relationships, particularly for MedTech companies offering software, service contracts, or reusable devices. It helps measure the efficiency of sales efforts, informs pricing strategies, and supports financial forecasting and investor reporting.
Additional Information & Related Terms
Customer Lifetime Value (CLV) Measures the total revenue a customer is expected to generate over their lifecycle.
Recurring Revenue Revenue from subscription-based or repeat service contracts, often reflected in ACV.
Sales Funnel Helps identify the contracts contributing to ACV during different stages of the sales process.
Software as a Medical Device (SaMD) Often uses ACV to evaluate the revenue generated from software subscriptions.