What are Expansion Bookings?
A booking is a contractual obligation between the company and the customer. Think of it as any transaction that has an impact on revenue. An expansion booking then is when an existing customer begins to pay more than the period before (often related to renewing at a higher price, adding additional products, buying more seats, etc.).
What are new bookings in SaaS?
A new booking is what it sounds like — when existing or new customers subscribe to a new service.
What is the difference between SaaS bookings and TCV?
The main difference between SaaS bookings and Total Contract Value is that SaaS bookings only measure the actual revenue recognized during a specific period. TCV bookings, on the other hand, measure the total value of all contracts signed during the period, including deferred revenue.
How to calculate bookings in SaaS?
To calculate bookings, SaaS firms typically follow these steps:
- Determine Contract Value: Identify the value of the contract your customer signed. This value can include recurring revenue, upfront fees, and any other charges associated with the product or service.
- Recognize Revenue: Next, determine when to recognize revenue from the contract. Generally, revenue is recognized over the contract's term, which can span multiple periods.
- Calculate Bookings: Bookings are calculated as the total value of all customer contracts signed within a specific period, regardless of when the revenue will be recognized. Meaning if a customer signs a contract for a 12-month period, the full contract value will be included in the bookings, even if the revenue will be recognized over several months or quarters.
What is the difference between new business and expansion bookings?
New business strictly refers to a booking with a first-time customer. Often customers will have multiple contracts, but a new contract for an existing client is not new business.
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