1. What is a TCV Calculator?

Definition: This calculator estimates the Total Contract Value based on recurring revenue and contract duration.

Purpose: It helps businesses and sales professionals calculate the total value of contracts or subscriptions.

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 (periods, e.g., months)

Explanation: The recurring revenue is multiplied by the number of periods to calculate the total contract value.

3. Importance of TCV Calculation

Details: TCV helps businesses understand the total revenue potential of contracts, forecast revenue, and evaluate customer lifetime value.

4. Using the Calculator

Tips: Enter the recurring revenue amount and contract duration in periods (typically months). All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between TCV and ARR?
A: TCV is the total value over the contract term, while ARR (Annual Recurring Revenue) normalizes this to a yearly amount.

Q2: Should I include one-time fees in revenue?
A: For pure TCV calculation, only include recurring revenue. For complete contract value, you might add one-time fees separately.

Q3: What time periods should I use?
A: Use whatever period matches your billing cycle (months are most common for SaaS/subscription businesses).

Q4: How does this differ from customer lifetime value?
A: TCV is for a specific contract term, while LTV estimates total value over the entire customer relationship.

Q5: Should I use this for multi-year contracts?
A: Yes, just ensure your duration is in consistent periods (e.g., 24 for a 2-year monthly contract).