Software Contract Value Calculator
Calculate Annual Contract Value (ACV) and Total Contract Value (TCV) for software subscriptions and licenses
Calculate Software Contract Value
Pricing Inputs
Regular monthly subscription price per user
Number of users who will pay for access
Discount Settings
Percentage discount off regular price
Contract Duration
Total contract duration: 12 months
Software Contract Costs
Contract Summary: 5 seats × $45.00/month × 12 months
Savings: $300 total (10.0% discount)
Revenue Metrics Analysis
Revenue Breakdown
Per Seat Metrics
Contract Value Insights
ACV vs TCV: Annual Contract Value is $2700, Total Contract Value is $2700
Average Monthly: $225 per month over 12 months
Revenue Growth: Less than 1 year contract
Example Calculation
SaaS Business Example
Retail Price: $50/user/month
Seats: 10 users
Discount: 15% volume discount
Contract: 2 years (24 months)
Calculation Results
Discounted Price: $42.50/user/month
Monthly Cost: $425
Annual Cost (ACV): $5,100
Total Contract Value (TCV): $10,200
Total Savings: $1,800 (15%)
Key Contract Metrics
Annual Contract Value
Revenue earned per year
Key metric for yearly planning
Total Contract Value
Total revenue over contract term
Complete contract worth
Monthly Recurring Revenue
Predictable monthly income
Foundation of SaaS business
Contract Tips
Longer contracts often justify higher discounts
Volume discounts encourage larger seat purchases
ACV helps in revenue forecasting and planning
TCV shows total customer lifetime value
Understanding Software Contract Value
What is Software Contract Value?
Software contract value represents the monetary worth of a software subscription or license agreement. It includes both Annual Contract Value (ACV) and Total Contract Value (TCV), which are crucial metrics for software businesses to track revenue and growth.
Why Calculate Contract Value?
- •Revenue forecasting and business planning
- •Customer lifetime value assessment
- •Pricing strategy optimization
- •Sales performance evaluation
Calculation Formulas
Discounted Price = Retail Price × (1 - Discount%)
Monthly Cost = Discounted Price × Seats
ACV = Monthly Cost × 12
TCV = Monthly Cost × Contract Duration (months)
- Retail Price: Monthly subscription price per user
- Seats: Number of users/licenses
- Discount: Percentage or fixed amount reduction
- Duration: Contract length in months
ACV vs TCV: ACV normalizes revenue to yearly basis, while TCV shows total contract worth.
Software Pricing Strategies
Volume Discounts
Offer percentage discounts for purchasing multiple seats to encourage larger deals and increase TCV.
Annual Commitments
Provide discounts for longer contract terms to improve cash flow and reduce churn risk.
Tiered Pricing
Structure pricing tiers based on features or usage to maximize revenue per customer.