WELCOME TO ISSUE NO #029

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📆 Today’s Rundown

Hey 👋, in the latest issue, we discussed why tracking Invoice Status (Count) matters, and this was the last topic from Billings & Collections content. But now (drumrolls please 🥁), we are moving with the first topic from Bookings & Customers content, and today’s topic is:

Annual Contract Value (ACV)

Is Your ACV Strategy Really Driving Growth? Let’s Talk About Contract Value.

Newsletter highlights

1. 3 big reasons why ACV matters 🤟

2. ACV Stat of the Week 🔢

3. My Tool of the Week 📊

4. Latest Week Content Update 🆓

3 Reasons Why Tracking ACV Matters

1. It helps you see the real value of every customer

   • Annual Contract Value (ACV) is a key metric to understand what each customer is really worth on a yearly basis, especially if your pricing changes over time.

   • It paints a clear picture of how your SaaS pricing strategy plays out in actual dollars and cents, making it easier to understand which customers are most valuable.

2. It helps shape your pricing strategy

   • The SaaS industry is shifting towards more flexible, consumption-based pricing, which means income from customers can fluctuate.

   • ACV helps you normalize those ups and downs, so you can get a steady view of how your onboarding costs, discounts, and extra features are impacting your bottom line.

   • It’s a great tool to keep your pricing strategy grounded in reality.

3. It guides your business decisions

   • By understanding ACV, you can categorize your business into high ACV or low ACV segments.

   • This allows you to focus your strategy where it matters. If you’re a high ACV company, you’ll want to focus on fewer but larger deals.

   • On the other hand, if you’re in the low ACV game, volume is king.

ACV Stat of the Week

$26,667

That’s the average ACV for a customer with a 3-year contract totaling $80,000—showing how multi-year contracts can shape annual income, especially when factoring in first-year discounts.

For example, SaaS Capital's benchmarking survey showed that high-ACV companies (>$30k annually) tend to have better growth and retention metrics compared to lower-ACV peers.They found that increasing ACV, either through upselling or targeting larger customers, was strongly correlated with higher growth and improved Net Revenue Retention (NRR), leading to more sustainable and predictable revenue outcomes

My Tool of the Week

Baremetrics

Baremetrics is a powerful analytics platform designed to help SaaS companies gain a comprehensive understanding of their key metrics, including ACV.

Here’s what Baremetrics offers:

• ACV Calculation: Baremetrics makes tracking ACV easy, with detailed insights into both individual and average ACV across your customer base.

• Customer Segmentation: Segment your customers by plan, lifetime value, and behavior, enabling you to focus on the most profitable customer segments.

• Revenue Forecasting: Baremetrics includes revenue forecasting tools that help you visualize how changes in ACV impact your overall financial health.

What I love about Baremetrics is how it provides instant visibility into your financial metrics without the need for complicated setup, allowing you to make data-driven decisions quickly and effectively.

Latest week content update

Here is the latest week content which

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