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Annual Contract Value Calculator

Normalise a multi-year contract into its annual value, and the total value over the full term.

About Annual Contract Value Calculator

ACV strips out non-recurring fees and divides the rest by the term in years, which is what makes a three-year deal comparable with an annual one. Quoting TCV as if it were ACV overstates run-rate revenue by the length of the term. Sales teams are often compensated on TCV while the business is valued on ACV, and confusing the two inflates apparent growth.

Formula

Annual Contract Value

ACV = (total contract value − one-off fees) ÷ term in years

TCV
Everything the customer is committed to pay
ACV
The recurring portion expressed per year

Worked example

With the default values below, Annual Contract Value Calculator returns Annual Contract Value of $93,333.33. Change any input above and every figure here is recalculated in your browser.

Inputs used

Total contract valueminimum 0
300,000
Contract termaccepts 1–120 months
36 months
One-off setup or services fees includedminimum 0
20,000

Results

Annual Contract Value
$93,333.33
Recurring Value Over the Term
$280,000.00
Monthly Recurring Value
$7,777.78
Contract Term
3.00 years
One-Off Fees as Share of Contract
6.67%

Step by step

  1. 1Values used
  2. 2Annual Contract Value
  3. 3Annual Contract Value= 93,333.33
  4. 4Recurring Value Over the Term= 280,000.00
  5. 5Monthly Recurring Value= 7,777.78
  6. 6Contract Term= 3.00 years
  7. 7One-Off Fees as Share of Contract= 6.67

Assumptions and limits

  • The result is derived only from the 3 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Annual Contract Value calculated?

ACV = (total contract value − one-off fees) ÷ term in years ACV strips out non-recurring fees and divides the rest by the term in years, which is what makes a three-year deal comparable with an annual one. Quoting TCV as if it were ACV overstates run-rate revenue by the length of the term.

Why does Annual Contract Value matter?

Sales teams are often compensated on TCV while the business is valued on ACV, and confusing the two inflates apparent growth.

What values do I need to enter?

This calculator takes 3 inputs: Total contract value, Contract term, One-off setup or services fees included. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.

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