1. What is a Total Contract Value Calculator?

Definition: This calculator estimates the total value of a contract based on recurring revenue and contract duration.

Purpose: It helps businesses and professionals evaluate the full financial value of contracts, subscriptions, or service agreements.

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 amount is multiplied by the number of periods in the contract to determine the total value.

3. Importance of Total Contract Value Calculation

Details: TCV helps in financial planning, revenue forecasting, and comparing different contract options. It's particularly important for SaaS businesses and service providers.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What counts as a "period" in the calculation?
A: A period can be any consistent time unit (month, quarter, year) as long as the revenue amount corresponds to that same period.

Q2: Should I include one-time fees in the revenue amount?
A: No, this calculator is for recurring revenue only. For one-time fees, add them separately to the calculated TCV.

Q3: How does this differ from Annual Contract Value (ACV)?
A: ACV typically shows revenue normalized to one year, while TCV shows the total value over the entire contract term.

Q4: What if my contract has variable pricing?
A: Use an average revenue amount or calculate each period separately and sum the results.

Q5: Can I use this for multi-year contracts?
A: Yes, just enter the total number of periods (e.g., 36 for a 3-year monthly contract).