Software companies report bookings as ACV (normalised to one year) and TCV (the whole contract). Multi-year deals often come with bigger discounts in exchange for commitment and predictable revenue.
How to use the Software Contract Value Calculator
- List price per user per month
- Seats (users)
- Discount
- Fixed discount per user per month
- Contract length
- One-time fees (setup, training)
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the list price per user per month, seats, discounts, contract length and one-time fees.
Tips
- Use figures for the same period (a month, a quarter or a year) for every input so ratios compare like with like.
- Track the metric over time – the trend usually tells you more than a single value.
- Compare your result with industry benchmarks, which vary a lot between sectors.
- Treat the result as a starting point for a decision, then check the assumptions behind each input.
Common mistakes to avoid
- Mixing monthly and yearly numbers in the same calculation.
- Using revenue where the formula needs profit (or the other way round).
- Forgetting hidden costs such as taxes, fees, overheads or your own time.
Inputs explained
| Field | What to enter |
|---|---|
| List price per user per month | Amount in your currency |
| Seats (users) | A number |
| Discount | In % |
| Fixed discount per user per month | Amount in your currency |
| Contract length | Units: years, months |
| One-time fees (setup, training) | Amount in your currency |
What each result means
- Discounted price per user per month = [List price per user per month]×(1 – [Discount]÷100) – [Fixed discount per user per month]
- Monthly cost = [Discounted price per user per month]×[Seats (users)]
- Annual contract value (ACV) = [Monthly cost]×12
- Total contract value (TCV) = [Monthly cost]×[Contract length] + [One-time fees (setup, training)]
- Total discount over the contract = ([List price per user per month]×[Seats (users)] – [Monthly cost])×[Contract length]
Example values
How the main result changes when List price per user per month changes and everything else stays at the example values above:
| List price per user per month | Annual contract value (ACV) |
|---|---|
| 22.5 | 27,540 |
| 33.75 | 41,310 |
| 45 | 55,080 |
| 56.25 | 68,850 |
| 67.5 | 82,620 |
| 90 | 110,160 |
Formula
Discounted price per seat = list price × (1 − discount %) − fixed discountMonthly cost = discounted price × seatsACV = monthly cost × 12; TCV = monthly cost × contract months + one-time feesWorked example
Inputs — List price per user per month: $45; Seats (users): 120; Discount: 15 %; Fixed discount per user per month: $0; Contract length: 3 years; One-time fees (setup, training): $5,000.
Results — Discounted price per user per month = $38.25; Monthly cost = $4,590.00; Annual contract value (ACV) = $55,080.00; Total contract value (TCV) = $170,240.00; Total discount over the contract = $29,160.00.
Frequently asked questions
What is the difference between ACV and TCV?
ACV is the yearly value of a contract; TCV is its full value including one-time fees.
Should one-time fees be in ACV?
Usually not – ACV normally includes recurring revenue only.
Why offer multi-year discounts?
They lock in revenue and reduce churn risk.
What formula does the Software Contract Value Calculator use?
Discounted price per seat = list price × (1 − discount %) − fixed discount.