SaaS Metric
Total Contract Value (TCV)
Definition
Total contract value (TCV) is the full value of a contract across its entire term, including recurring fees plus any one-time charges like setup or professional services. TCV = (recurring value per year × term in years) + one-time fees. It differs from ACV, which annualizes only the recurring portion, and from ARR, which counts only the recurring run-rate.
Formula
TCV = (annual recurring value × contract term in years) + one-time fees (one-time fees include setup, onboarding, and professional services)
Benchmark
No universal benchmark — TCV scales with deal size and term length. It is most useful for comparing total deal economics, not for run-rate reporting.
TCV vs. ACV vs. ARR
These three measure overlapping but different things. ARR is the annualized recurring run-rate — recurring revenue only, normalized to a year. ACV annualizes the recurring value of a single contract, also excluding one-time fees. TCV is the broadest: the entire value of the contract over its full term, including one-time charges. A three-year deal at $100K/year recurring with a $30K setup fee has a TCV of $330K, an ACV of $100K, and contributes $100K to ARR.
Use each for its purpose. TCV is right for understanding total deal economics and sales compensation; ACV normalizes deals of different lengths for comparison; ARR is the run-rate metric for valuation and growth. Mixing them — quoting TCV where ARR is expected — overstates recurring scale and misleads.
Frequently asked questions
How do you calculate total contract value?
Multiply the annual recurring value by the contract term in years, then add any one-time fees such as setup, onboarding, or professional services. A three-year deal at $100K per year plus a $30K setup fee has a TCV of $330K.
What is the difference between TCV and ACV?
TCV is the full value of a contract over its entire term, including one-time fees. ACV annualizes only the recurring portion of a single contract. The same multi-year deal therefore has a larger TCV than ACV.
Is TCV the same as ARR?
No. ARR is the annualized recurring run-rate and excludes one-time fees and contract length, while TCV is the total value over the full term including one-time charges. Quoting TCV as if it were ARR overstates recurring revenue.
Related metrics
Annual Contract Value (ACV)
Annual contract value (ACV) is the average annualized revenue per customer contract. Learn the ACV formula, how it differs from TCV and ARR, and how to use it.
Annual Recurring Revenue (ARR)
Annual recurring revenue (ARR) is the normalised yearly value of recurring subscriptions. Learn the ARR formula, how it differs from MRR and total revenue, and when to use it.
Average Revenue Per Account (ARPA)
ARPA (average revenue per account), also ARPU, is recurring revenue divided by number of accounts. Learn the formula, why it matters for pricing and LTV, and how to grow it.
Customer Lifetime Value (LTV)
Customer lifetime value (LTV) estimates the gross-margin revenue an average customer generates before churning. Learn the margin-adjusted LTV formula, the LTV:CAC ratio, and benchmarks.
Track this automatically
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Benchmarks are general SaaS ranges and vary by segment, stage and business model. Last reviewed 2026-05-30.