Bookings
Also known as: sales bookings
In short
Bookings is the total value of contracts customers sign in a period, counted when the deal closes. It measures sales performance, not revenue or cash.
Companies define bookings differently. Some count total contract value, others only annualized recurring value. Teams should state which one they use before setting quotas.
Types of bookings
- Total contract value: The full value over the contract term.
- Annual contract value: The yearly slice, which allows deals of different lengths to be compared.
- New and expansion: New-logo bookings and bookings from existing customers are usually reported separately.
Bookings vs. billings vs. revenue
- Bookings: Signed value, counted at close.
- Billings: What has been invoiced.
- Revenue: What is recognized as the service is delivered.
- ARR: Annualized recurring value of active customers, which bookings feed once contracts go live.
Example
Say a rep closes a two-year contract at 40,000 per year. Under a total-value definition, bookings are 80,000. Under an annualized definition, bookings are 40,000. Billing might be 40,000 upfront, and revenue is recognized at roughly 3,333 per month.
How GTM teams use bookings
Quotas and commissions
Most sales compensation plans are tied to bookings, which is why the definition must be precise, including how discounts, multi-year terms, and renewals count.
Pipeline coverage
Bookings targets drive how much pipeline you need. Compare pipeline coverage with the gap between current bookings and quota.
Forecasting
Bookings today show in billings and revenue later, so they give an early view of growth.
Common mistakes
- Counting unsigned deals: Verbal commitments are not bookings.
- Mixing renewals and new business: Renewal bookings can hide weak new-logo performance.
- Ignoring cancellations: Define how clawbacks and early terminations adjust bookings.
Bookings FAQs
What are bookings in sales?
Bookings are the total value of customer contracts signed during a period, counted at the time of signature. They measure sales output and come before billing, revenue recognition, and cash collection.
What is the difference between bookings and revenue?
Bookings count the value of contracts when signed. Revenue is recognized under accounting rules as the product or service is delivered. A one-year contract signed today is booked immediately but recognized as revenue across the following twelve months.
What is the difference between bookings and ARR?
Bookings measure contract value signed in a period, while ARR measures the annualized recurring revenue from all active customers. Bookings can include one-time fees and multi-year totals, whereas ARR covers only yearly recurring value.
How do you calculate bookings?
Add up the value of all contracts signed in the period, using your company definition: total contract value or annualized value. For example, three deals worth 20,000, 35,000, and 45,000 on an annualized basis give bookings of 100,000.
