Bookings

Bookings in SaaS

Bookings in a SaaS (Software as a Service) business are the total value of all customer contracts signed or orders received in a specific period, no matter when the money from those deals will be collected.

SaaS Bookings Example

Imagine a SaaS company signs a 3-year contract with a customer for $1,000 per month. The total bookings for this contract are $36,000.

This is because: 3 years × 12 months × $1,000 per month=$36,000.

This $36,000 represents the total deal value the company has secured, although the company will receive this money over the three-year period as it provides the service.

Bookings Calculation

To calculate bookings, you usually multiply the number of new customers, customer upgrades, or renewals by the value of their contracts. For example, if a company gets 50 new customers, each paying $10,000 a year, the total bookings would be $500,000.

If an existing customer upgrades their plan from $10,000 to $15,000 a year, the additional bookings from this upgrade would be $5,000.

Types of Bookings

There are three main types of bookings in SaaS:

• New Bookings: These come from new customers who sign up during a specific period.
• Expansion Bookings: These come from existing customers who upgrade their subscriptions or buy extra services.
• Renewal Bookings: These come from customers who renew their current subscriptions, usually at the same or a slightly higher price.

Tracking these types of bookings helps understand how a SaaS business is doing:

New bookings show that the company is attracting new customers.

Expansion bookings indicate that existing customers are happy and want more services. Renewal bookings show that customers are satisfied and want to continue using the service.

Importance of Bookings in SaaS

Bookings are important for SaaS companies because they give an idea of how well the business is doing and its potential for growth. Bookings show the total value of new deals, even if the money from those deals will come in later. This helps company leaders predict future revenue.

By looking at bookings, SaaS companies can:

• Predict Revenue: Knowing your bookings helps predict future cash flow, as this revenue will be earned over the duration of customer contracts.
• Check Sales Performance: Watching bookings can show if sales and marketing efforts are working to bring in new customers and keep existing ones happy.
• Guide Growth Strategies: Information from bookings can help make decisions about hiring, investments, new products, and expansion.
• Communicate with Stakeholders: Sharing bookings information in reports shows investors and others how the company is growing.

Understanding and tracking bookings is key to managing and forecasting the financial health of a SaaS business.