1. What is a SaaS Total Contract Value Calculator?

Definition: This calculator estimates the total value of a SaaS (Software as a Service) contract based on recurring revenue and contract duration.

Purpose: It helps SaaS businesses and sales teams understand the full value of customer contracts over their lifetime.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( TCV \) — Total Contract Value (USD)
• \( R \) — Revenue per period (USD)
• \( T \) — Contract duration (months)

Explanation: The monthly recurring revenue is multiplied by the number of months in the contract term to calculate the total value.

3. Importance of TCV Calculation

Details: Understanding TCV helps with revenue forecasting, sales performance measurement, and business valuation.

4. Using the Calculator

Tips: Enter the recurring revenue amount (monthly, quarterly, or annual) and the contract duration in months. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between TCV and ARR?
A: TCV (Total Contract Value) is the full value of the contract, while ARR (Annual Recurring Revenue) is the yearly value of recurring revenue.

Q2: Should I include one-time fees in TCV?
A: Yes, if calculating complete contract value. For pure SaaS metrics, you might exclude them.

Q3: How does TCV relate to customer lifetime value (LTV)?
A: TCV is the contractual value, while LTV estimates the total revenue from a customer including renewals.

Q4: What if my contract has tiered pricing?
A: Calculate each tier separately and sum the TCV for each period.

Q5: How do discounts affect TCV?
A: Use the discounted revenue amount in your calculation to reflect actual contract value.