What is TCV?
TCV is a core concept in modern B2B revenue. Here is a clear, accurate definition, why it matters, and how Ardovo handles it.
Short answer
TCV, or total contract value, is the complete value of a customer contract over its entire term, including recurring subscription revenue plus any one-time fees such as setup or professional services. Unlike ACV, which annualizes, TCV captures the full lifetime commitment of a deal, making it useful for cash and backlog planning.
Key takeaways
- Total value of a contract across its full term.
- Includes recurring revenue plus one-time fees.
- Broader than ACV, which annualizes recurring value.
- Useful for backlog, cash, and commission planning.
Why it matters
TCV shows the full size of what a customer committed to, which matters for cash forecasting, backlog, and often for how reps are paid on multi-year deals.
How Ardovo handles it
Ardovo captures TCV from a deal's full line items and term, keeping recurring and one-time components separate so bookings, backlog, and commissions all reconcile. Rook can report TCV alongside ACV on any deal.
Frequently asked questions
How is TCV calculated?
Multiply the recurring revenue by the number of periods in the term and add all one-time fees. A three-year deal at 40,000 dollars per year plus a 10,000 dollar setup fee has a TCV of 130,000 dollars.
When should you use TCV instead of ACV?
Use TCV for cash, backlog, and total-commitment views, and for commissions on full deal value. Use ACV to compare deals of different lengths on an equal annual basis.