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A $36,000 contract over 36 months
The customer commits $36,000 over 36 months. You have 4 contracts of that same size. Add unlike contracts on their own, then type one average if you want a single book figure from this page.
Committed contract value: 25% lower
Change committed contract value to 27,000 while keeping the other example values the same.
Committed contract value: 25% higher
Change committed contract value to 45,000 while keeping the other example values the same.
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Quick answer
What does the Annual contract value calculate?
What is the annualized value of this subscription contract? This calculator uses committed contract value, term, and matching contracts to estimate committed value as a year immediately in your browser.
With the values currently entered, the result is $12,000.00 — annual contract value. It also shows monthly value, book annual contract value, and term.
How to use the Annual contract value
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Committed contract value
- Term — entered in months
- Matching contracts — entered in contracts
Annual contract value formula
Annual contract value = committed value ÷ months × 12. Monthly value = that result ÷ 12. Book value = annual contract value × the count of matching contracts.
Assumptions
- The Pure Storage letter to the SEC on September 8, 2025 calculates annualized contract value as total committed contract value divided by the days in the term, then multiplied by 365. This page uses months: value ÷ months × 12.
- Leave one-time fees out when you want the subscription run rate in that letter. A term under 12 months annualizes upward, so the annual figure can exceed the cash in the contract. Count only contracts of this same value.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Annual contract value example and edge cases
Pure Storage’s September 8, 2025 letter to the SEC calculates annualized contract value by dividing committed contract value by the days in the term, then multiplying by 365. This page uses months. It divides the committed value by the term in months, then multiplies by 12.
Example: A $36,000 contract over 36 months
The customer commits $36,000 over 36 months. You have 4 contracts of that same size. Add unlike contracts on their own, then type one average if you want a single book figure from this page.
- Committed contract value
- 36,000
- Term
- 36 months
- Matching contracts
- 4 contracts
Calculated result$12,000.00annual contract value
Each contract is worth $12,000 a year, which is $1,000 a month. Four matching contracts are $48,000 of annual contract value. The $36,000 is the cash in the term.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Annual contract value is the run rate of the committed cash. A 36-month contract spreads that cash over three years, so the annual figure is one third of the total.
- A term shorter than 12 months annualizes upward. A $6,000 contract over 6 months is $12,000 a year, while the cash inside the contract stays $6,000.
Edge cases worth checking
A setup fee is inside the committed value
The Pure Storage letter annualizes subscription contract value. A one-time setup fee inside the box gets spread across the year with the subscription. Leave that fee out when you want the subscription run rate.
The term is a count of days
Pure Storage divides by the days in the term and multiplies by 365. This page divides by months and multiplies by 12. Convert a day count to months before you type it, or the two methods disagree on a partial month.
What changes the result most
Committed contract value
Use a current amount for committed contract value. Include fees or recurring costs that belong in the same figure.
Term
Keep term on the same time basis as the other inputs. Monthly and annual values are easy to mix up.
Matching contracts
Change matching contracts on its own first. This shows how strongly it affects the answer.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Committed contract value: 25% lower
27,000$9,000.00annual contract value
Committed contract value: 25% higher
45,000$15,000.00annual contract value
Term: 25% higher
45 months$9,600.00annual contract value
Common mistakes
Check committed contract value
The Pure Storage letter to the SEC on September 8, 2025 calculates annualized contract value as total committed contract value divided by the days in the term, then multiplied by 365. This page uses months: value ÷ months × 12. Make sure this matches the number you enter.
Keep matching contracts consistent
Leave one-time fees out when you want the subscription run rate in that letter. A term under 12 months annualizes upward, so the annual figure can exceed the cash in the contract. Count only contracts of this same value. Use the same units and time period throughout the calculation.
Do not rely on one annual contract value scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
What is the annualized value of this subscription contract?
It does not replace a quote, contract, accountant, or local employment guidance.