A major obstacle in extending the theory of well-bounded operators to cover operators whose spectrum is not necessarily real has been the lack of a suitable variation norm applicable to functions defined on an arbitrary nonempty compact subset σ of the plane. In this paper we define a new Banach algebra BV(σ) of functions of bounded variation on such a set and show that the function-theoretic properties of this algebra make it better suited to applications in spectral theory than those used previously.