Total Contract Value (TCV): What It Means & How to Calculate It
Learn what Total Contract Value (TCV) means in digital advertising, how to calculate it, and why it matters for revenue forecasting, client strategy, and ROI analysis.
glossary
1
min read
Total Contract Value (TCV) is the total revenue you expect to receive from a client over the full length of a signed agreement. This includes both:
Recurring revenue (such as monthly or annual platform fees or service retainers)
One-time fees (such as onboarding, creative development, or media strategy sessions)
For performance marketers and agencies managing multi-month engagements, TCV offers a realistic, contract-based metric that reflects the full financial impact of a client relationship, rather than just monthly spend.
How to Calculate Total Contract Value
The formula is simple:
TCV = (Monthly Recurring Revenue × Contract Length in Months) + One-Time Fees
Example:
Let’s say a client signs a 12-month contract with:
$4,000/month in platform and service fees
$6,000 in upfront onboarding and creative production costs
Then:
TCV = ($4,000 × 12) + $6,000 = $54,000
Any changes in contract duration or monthly value will impact the total, so it’s a metric worth revisiting when pricing tiers, deliverables, or scope shift.
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