Enter the monthly recurring revenue, the contract term (months), and the contract fees to determine the total contract value (TCV)

TCV Formula

The following formula is used to calculate a total contract value.

TCV = MRR * CL + CF

Where TCV is the total contract value ($)
MRR is the monthly recurring revenue from the contract ($/month)
CL is the contract length (months)
CF is additional contract fees ($)

To calculate the total contract value, multiply the monthly recurring revenue by the contract length, then add additional contract fees.

TCV Definition

What is a total contract value?

A total contract value is defined as the monthly recurring revenue multiplied by the contract length plus any additional contract fees. It describes the total value of a contract signed by two companies.

Example Problem

How to calculate total contract value?

First, determine the total monthly recurring revenue for the contract.
For this example, the contract is worth a total of $5,000.00 per month.
Next, determine the length of the contract in months.
In this case, the originally planned time is for the contract to run 12 months.
Next, determine any additional contract fees.
In this example, there is $5,000.00 for completing the full length of the contract.
Finally, calculate the total contract value using the formula.
Using the formula above, the TCV is calculated to be:
TCV = MRR * CL + CF
TCV = $5,000 * 12 + $5,000
TCV = $65,000.00