Do.it.for.the.checks

Account Executive

ARR or TCV?

Hey Saas Savages,

When discussing your sales do you talk about ARR or TCV? When I put together my internal Tiger Team summaries, I tend to include both as I figure certain departments may be less in tune to the actual contracts. But when I'm talking to recruiters I usually talk just about the ARR, but I recently saw a JD for an Enterprise AE but noticed the 6 figure deals were TCV meaning very likely 5 figure deals ARR.

Then I've noticed some really good sized deals on WR win wire that look better because they are TCV.

What's everyone's thoughts on this? ARR or TCV? Does it even matter?

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19 comments

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CuriousFox

WR Officer

🦊

I speak in TCV.

Do.it.for.the.checks

Politicker

Account Executive

Any particular reason why? Or just what you've always done?

TheColdestColdCall

Executive

Enterprise Account Executive

Not sure I can speak for @curiousfox here but I think the reality is you're getting a prospect to commit to the TCV and not ARR/ACV.

So while I could sell a 1yr deal at 100k, selling a 3yr deal at 300k is in fact securing 300k vs 100k per year.

That's my thought at least.

poweredbycaffeine

WR Lieutenant

☕️

We measure company growth in ARR, we pay commission on ARR, and track CAC and time to pay back on TCV. Every org/team is different, so it is going to come down to how that company's accounting/revenue team thinks about the world.

CaneWolf

Politicker

Call me what you want, just sign the damn contract

Not everyone sells subscription services. The standard tends to be if you sell:

-Subscription services that you highlight in ARR (but of course feel free to say $80k a year for 3 years)
-Hybrid (you sell the subscription and implementation) you do TCV but are ready to break it out
-Non-subscription services as TCV

Rupert_Pupkin

Contributor

Account Executive

When we had finance conversations it was all about what they could recognize as ARR

Do.it.for.the.checks

Politicker

Account Executive

Yeah, it's the number most number crunchers seem to care about. What about outside of finance?

Rupert_Pupkin

Contributor

Account Executive

Yeah for example in forecast meetings we'd give both, but the ARR was still the number we would really hone in on, likely because it was what went towards quota relief and commission. "$400k deal over 4 years, so ARR is $100k"

Justatitle

Big Shot

Account Executive

I always speak in ARR as that is what gets me paid. it's probably a bad habit.

Do.it.for.the.checks

Politicker

Account Executive

I'm the same, to be honest.

But I've found if you are trying to justify eating the cost of a project or create willingness to take on a less than the ideal customer, it helps to use the TCV and even sometimes the TAM on a particular account to get buy in

UserNotFound

Politicker

Account Executive

Internally we use MRR actually, but I like to think in terms of TCV for my own measurements so I know where I sit re: paying for myself. I’m still building a pipeline so I’m pedal to the metal until I get my company in the black on me. (Should be next month!)

1nbatopshotfan

Politicker

Sales

We were acquired last year, and everything was discussed in ACV and now it’s shifting to TCV when the fiscal year ends. It leads to a lot of confusion on internal calls lol.

I generally speak in TCV now out of habit.

mitts2

Politicker

Account Executive

depends on what I'm talking about. If I am talking about my own deals, I'll talk in ACV / TCV. If I am talking about the broader SaaS business goals, I'll talk in ARR because that's how most SaaS investors evaluate start ups. Both are important.

PedraPeanut

Old School Bravo

Director of Inside Sales

General software should be TCV. SaaS specifically should be ARR.

Blackwargreymon

Politicker

MDR

Get the experience from the other roles. Excel and get promoted quickly.

Clashingsoulsspell

Politicker

ISR

When we had finance conversations it was all about what they could recognize as ARR

MR.StretchISR

Politicker

ISR

Mr.Floaty

Politicker

BDR

I couldn't tell you from personal experience what would be best. But what I do know is that crushing quota doesn't mean someone would make a great director or VP.

Cyberjarre

Politicker

BDR

I think it's important to go through all these rolls to get experience, then again, I'm still a team lead.

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Do.it.for.the.checks

ARR or TCV?

19 comments

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