TCV calculation

[Yvonne]

QUESTION OR PROBLEM STATEMENT

How do I calculate TCV?

[Yvonne · Accepted solution]

SOLUTION

TCV is a reference amount, it may not be the same as the invoice amount calculated via RBE, especially when the charge has a proration. 

Here I would like to use some example to explain how TCV is calculated:

For example, if the charge is triggered on 2/27/2017, then for the charge, its start date is 02/27/2017, end date is 02/01/2018, 

1. interval months: 11 months.
2. Partial Date = Start Date + Interval Months = 01/27/2018
3. Interval Date = End Date - Partial Date = 02/01/2018 - 01/27/2018 = 5 days
4. Base Days = (Start Date + Interval Months + one month) - Partial Date = 02/27/2018 - 01/27/2018 = 31 days
5. TCV = MRR x ( interval Months + (Interval Date / Base Days)) = MRR * (11 + 5/31)

However, if you set the trigger date on 02/28/2017, which is a month-end, then the calculation is a little bit different:

1. interval months: 11 months.
2. Partial Date = Month-End + Interval Months = 01/31/2018 ( which is also a month-end) = 01/31/2018
3. Interval Date = End Date - Partial Date = 02/01/2018 - 01/31/2018 = 1 day
4. Base Days = (Start Date + Interval Months + one month) - Partial Date = 02/28/2018 - 01/31/2018 = 28 days
5. TCV = MRR x ( interval Months + (Interval Date / Base Days)) = MRR * (11 + 1/28)