Total Contract Value (TCV) is the total revenue value of a customer contract over its entire length, including all recurring years plus known one-time fees. It's used to evaluate multi-year deal economics, set sales compensation, and forecast cash collection. It's the full-life-of-contract number; [ACV] is the annualized version.
The math:
TCV = (ACV × contract length in years) + known one-time fees
| Contract example | ACV | Length | One-time fees | TCV |
|---|---|---|---|---|
| 1-year SaaS subscription | $50K | 1 year | $0 | $50K |
| 2-year SaaS subscription | $50K | 2 years | $0 | $100K |
| 3-year SaaS + implementation | $50K | 3 years | $25K setup | $175K |
| 5-year enterprise deal | $200K | 5 years | $100K services | $1.1M |
When TCV matters most:
Sales compensation: sales ...