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How Total Contract Value is Calculated

Total Contract Value (TCV) is the sum of a contract's Total Contract Line Values (TCLV). The Total Contract Line Value (TCLV) of a line is its Sales Price * Number of Terms.

Several factors affect TCV and TCLV calculations:

• A contract without an End Date (a continuous contract) does not have a TCV calculated, but its lines may have their TCLVs calculated.
• Discounts, pricing structures, and quantity breaks are applied to the Sales Price before TCLV is calculated.
• A line will not have its TCLV calculated if any of the following conditions apply:
  • It does not have an End Date
  • It has a Start Date and End Date, but the Start Date is after the End Date
  • It does not have a Sales Price
• One-off lines have their TCLV set to the Sales Price, regardless of the conditions above.
• When a proration policy is assigned to a contract, any contract lines where the Billing Type is Recurring Fixed will be billed a prorated value if their start or end periods are partial periods.

Example

A contract starts on August 1, 2017 and ends on August 31, 2017. It has three lines as shown in the table below.

The TCLV for the One-off contract line is its sales price (100) regardless of whether or not proration applies to the contract.

There is no TCLV for the Recurring Variable contract line because it has no Sales Price and will be billed on usage.

The TCLV of the Recurring Fixed line varies if proration applies to the contract. Without proration, the TCLV is 210 because the line extends across three billing periods (70 * 3 = 210). With proration, the TCLV is the sum of:

charge for partial start period + charge for one whole period + charge for partial end period

As shown in the table above, if the contract's proration policy uses the Actual Days calculation method and the week begins on Monday, the TCLV will be 50 + 70 + 30 = 150 because the partial start period is 5 days, the second period is a whole period of 7 days, and the partial end period is 3 days.

Different proration calculation methods will result in different values for the start and end periods. See Proration Policies and Calculating Partial Periods for more information.

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