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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.

Note:

The TCV is always calculated based on the current state of the contract. If something changes during the life of a contract that affects its TCV, any amounts that have already been billed are unchanged.

Example

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

Billing Type	Sales Price	Start Date	End Date	Billing Term	TCLV without proration	TCLV with Actual Days proration
One-off	100	Aug 1, 2017	Aug 31, 2017		100	100
Recurring Variable	-	Aug 1, 2017	Aug 31, 2017		-	-
Recurring Fixed	70	Aug 12, 2017	Aug 26, 2017	WB + 3d	210	150

				TCV	310	250

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.

Related Concepts

Contracts

Change Requests

Enhanced Contracts Overview

Partially Billed Contracts

Related Tasks

Activating a Contract

Adding a Plan or Product to a Contract

Billing for Usage

Calculating Contract Values

Creating a Contract

Creating a Contract from a Plan