How to Calculate Bookings for Your Business
Knowing how to accurately calculate bookings can make a big difference in understanding your business’s true growth. Bookings measure the total value of customer commitments—think contracts, subscriptions, or orders—signed within a certain period. It’s not just about the cash coming in today, but about the deals you’ve secured for the future.
If you’re in SaaS or any subscription-based model, getting bookings right is critical: public SaaS companies report bookings as one of their main growth metrics, often using them to forecast revenue and gauge sales health. One study found that most SaaS board meetings start with a discussion of bookings before moving on to revenue or churn. But even outside SaaS, calculating bookings helps any business—from agencies to consultancies or product sales—plan ahead and track how well the team is landing deals.
In this guide, we’ll break down what counts as a booking, how to measure it step-by-step, and why it matters for your business planning, sales reporting, and future growth.
What Are Bookings?
Bookings represent the total value of all customer commitments—signed contracts or purchase orders—secured within a specific period. Unlike revenue, which only counts what’s actually been earned or invoiced and delivered, bookings reflect what your business has sold, even if the work or the service stretches into the future.
Key Differences: Bookings vs. Billings vs. Revenue
Confusing these terms is easy, but each tracks a different point in the sales process. Bookings capture the moment a deal is signed. Billings record when an invoice goes out. Revenue is recognized as products or services are delivered, following specific accounting principles. For example, if a software company sells a 12-month subscription in January, the full contract value is booked immediately, but revenue is recognized each month as the service is provided, and billing might happen monthly or as a lump sum at the start.
Why Bookings Matter in Business and SaaS
Bookings are more than just promises—they signal future growth. For SaaS businesses especially, bookings show sales momentum and hint at how much revenue is likely to flow in over the coming months or years. Reliable bookings data helps leaders spot trends early, adjust targets, and give investors a sense of predictability—key in fast-paced markets.
Now that you understand what bookings are and why they’re crucial, let’s break down the various types of bookings your business might encounter, so you can track and grow them confidently.
Types of Bookings Explained
Not all bookings have the same impact on your business. Knowing the different types helps you distinguish between a sudden spike and long-term stability. Here’s how bookings typically show up in real-world scenarios:
New Bookings
New bookings refer to fresh orders from customers who haven’t purchased from you before, or clients purchasing additional services for the first time. Think of these as the fuel for your company’s growth engine. They represent entirely new commitments: a brand-new annual software contract, a one-time event booking, or a first-ever consulting engagement. This type of booking is often a key focus for companies tracking their growth trajectory.
Renewals and Upgrades
Renewals happen when existing customers extend their agreements or subscriptions beyond the original term. These bookings signal customer satisfaction and stickiness—essential for recurring revenue businesses. Upgrades (sometimes called expansions or upsells) occur when a current client increases their level of service, such as moving from a basic to a premium plan. Both renewals and upgrades indicate trust and add incremental value over time.
Non-Recurring and Expansion Bookings
Not every booking runs on a subscription clock. Non-recurring bookings are one-off deals—like a single consulting session or a one-time product purchase. Expansion bookings, on the other hand, refer to existing customers committing to new products or services that weren’t part of their initial contract. Tracking these separately helps you see where flexible, opportunistic growth is coming from, compared to predictable, recurring revenue streams.
Each booking type tells a different story about your business’s health and future outlook. But to truly understand what gets counted (and what doesn’t), let’s break down which transactions should be included when tallying up your bookings.
Which Transactions Count as Bookings?
What to Include in Bookings
Bookings reflect new customer commitments that directly increase the value of your business pipeline—they capture the moment when a customer formally agrees to buy your product or service. These are the transactions you’ll want to include in your bookings calculations:
Bookings only reflect deals that are contractually committed and likely to be delivered—anything still in negotiation, or simply quoted, shouldn’t make the cut. For further validation on what constitutes a legitimate booking, take a look at resources like SaaSOptics’ guide to SaaS bookings.
What to Exclude from Bookings
To avoid inflating your business metrics, it’s important to leave out transactions that don’t represent solid new commitments:
Being precise with what you include and exclude is the key to getting a true picture of your business momentum and pipeline. Now that you know which transactions to count, let’s break down the exact steps and formulas you’ll use to total up your bookings accurately.
Step-by-Step Guide to Calculate Bookings
Bookings Formula With Example
Start with the core equation: total contract value equals the sum of all the products and services sold to a customer during a specific period. For a SaaS agreement, that might include an annual software subscription, one-time setup fees, or any add-on services outlined in the signed contract.
For example, suppose a client signs a 12-month subscription for $500 per month, with a $600 one-time onboarding fee. To calculate the total booking amount from this deal:
Total booking: $6,600
The calculation reflects the value committed at contract signing, regardless of when cash is received.
Net Bookings vs. Gross Bookings
It’s important to distinguish between gross and net bookings. Gross bookings represent all newly signed deals in the period, without subtracting any lost or reduced contracts. Net bookings account for deals gained minus any contract cancellations, downgrades, or customer churn.
For a clearer picture of business momentum, net bookings deliver more insight. However, tracking both gives your team visibility into new wins and where value is slipping away.
Quick Calculation Template
If you want to streamline your bookings calculations, set up a simple spreadsheet. Columns should include: customer name, contract start and end date, product or plan, recurring fee, one-time fees, and total value. Sum the “total value” column for your bookings report.
To make your process even smoother, there are online templates and calculators available, like this free MRR calculation template (adapt it for bookings by including one-time charges and contract period totals).
With your bookings numbers clarified, it’s time to connect the dots and see how these values shape your biggest business goals.
How Bookings Impact Business Metrics
Revenue Forecasting and Planning
When you track bookings closely, you create a clearer window into future revenue. Unlike revenue, which is recognized over time, bookings show up the moment a customer commits to a contract—even if the payment or service delivery happens later. This early signal allows you to forecast cash flow and adjust hiring or inventory plans before issues arise. For SaaS and subscription businesses, bookings predict upcoming annual recurring revenue (ARR) months in advance, helping teams align marketing and product development with real demand.
Sales Performance and Compensation
Bookings aren’t just a leading indicator—they’re usually the metric most sales teams care about. Sales reps often earn bonuses or commissions based on their total new bookings within a period. Measuring bookings at the moment contracts are signed (not just when invoices are paid) rewards pipeline-building and closing skills, while also allowing sales leaders to identify high performers and forecast team attainment against quota. Tracking bookings by product or territory can reveal opportunities to coach or reallocate resources in real time.
Investor Reporting and KPIs
Investors don’t just want to see cash in the bank—they want momentum. Bookings serve as a pulse check. Trends in bookings growth (or decline) stand out because they represent actual sales won, not delayed accounting recognition. Startups and public companies alike regularly report total bookings or net new bookings to demonstrate traction, customer expansion, or churn. This helps back up projections and narratives shared with stakeholders, especially in high-growth or subscription-focused industries.
Understanding these impacts makes it clear—calculating and interpreting bookings isn’t just for the finance team. Up next, you’ll learn exactly how to put these principles into practice for your own numbers, complete with example formulas and data breakdowns.
FAQs About Calculating Bookings
Do signed contracts always count as bookings?
Not necessarily. Only contracts that result in a financial commitment—meaning your customer has agreed to pay for products or services—should be included in your bookings. For example, a signed proposal that’s contingent on further approval doesn’t count until it’s finalized and both parties have agreed on the terms.
Should I include trial periods as bookings?
Free trials, pilots, and proof-of-concept agreements aren’t bookings unless there’s a signed commitment for payment after the trial. Wait until your customer becomes a paying client before adding the deal to your bookings total.
How do multi-year contracts factor into bookings calculations?
You should count the total contract value for the full committed period at the time the contract is signed—even if the payment happens over several years. For example, a three-year contract at $10,000 per year means a $30,000 booking at signing.
Should discounts or credits be deducted from bookings?
Yes. If you offer your customer a discount or apply a credit to the contract, only record the net contract value as a booking. This ensures your bookings figure accurately reflects the actual value your business will receive.
Are renewals and upsell deals included in bookings?
Absolutely. Renewals, expansion deals, and upsells should all be counted. These transactions represent fresh commitments—even from existing customers. Just make sure to exclude automatic renewals where the customer hasn’t signed a new contract or added additional value.
How often should bookings be calculated and reported?
Most companies track bookings monthly and quarterly to spot trends quickly and keep leadership teams in-the-know. If you’re reporting to investors, it’s important to align your booking reports with your standard financial periods.
Ready for the strategies that make bookings even more meaningful for your company? Let’s dive into how they shape crucial business decisions and metrics.