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TCV (Total Contract Value)

The total contract value (TCV) describes the total monetary value of a customer contract over its entire term.

Meaning in detail Contact us now

This TCV key figure includes both one-time and recurring income and provides a holistic basis for evaluating customer contracts.

Calculation: TCV = (Recurring monthly revenue × term in months) + One-time charges

Why TCV is important for companies

TCV enables medium-sized companies to forecast sales precisely and allocate resources strategically. Companies with systematic TCV analysis make more informed investment decisions and identify their most valuable customer relationships at an early stage.

Key benefits:

Improved budget planning
Optimized sales focus
Proactive customer loyalty with high-value accounts

practical example

A Munich-based software provider signs a 3-year contract: €4,000 monthly license + €12,000 setup = TCV of 156,000€. This transparency enables targeted investments in customer success and support.

Differentiation from related indicators

Customer Lifetime Value (CLV): Predicts net profit over the entire customer relationship, including acquisition costs
Annual Contract Value (ACV): Normalizes TCV on an annual basis (TCV ÷ runtime)
Annual Recurring Revenue (ARR): Focused only on predictable annual subscriptions

TCV in data strategy

Reliable TCV analyses require robust Data Governance And high data quality. With a complete Customer Golden Record Can TCV data be optimally linked to customer behavior — the basis for precise Churn Analysis & Prediction.

Common questions

Which systems do I need for TCV tracking? An integration of CRM, ERP and BI platform provides the best basis for automated calculations.

How does TCV differ in different business models? B2B TCV comprises more complex contract structures, while B2C usually focuses on standardized subscriptions.

How long does TCV implementation take? Typically 4-8 weeks, depending on system complexity and data quality.

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Related terms: ARPA (Average Revenue Per Account), ACV (Annual Contract Value), CLV (Customer Lifetime Value), MRR (Monthly Recurring Revenue), ARR (Annual Recurring Revenue), CAC (Customer Acquisition Cost), Churn Rate

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