Definition

SaaS bookings represent the amount of money that the business can expect to come in. It reflects the demand for the company's product/service and the overall market response. Although this is an annual number, bookings can be measured for more or less than a year. While making the bookings, a company can collect the payments at the start of the contract. Thus, it is recorded as a liability or deferred revenue. This is because the company is obligated to provide the product/service. Alternatively, the revenue can be recognized through the period of the contract.

Example

To calculate monthly bookings, a company must take into account the total value of all the contracts booked during a specific period.For instance - If Vareto makes total bookings of $2,400 under its standard service category and $160 worth of bookings under its lite service category the total SaaS bookings is $2560.

Why it matters

Businesses must understand their bookings to gauge overall health and further get insight into their sales process. Bookings and revenues, however, should not be misunderstood to be the same since these are two different things.

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