Definition
ARR vs bookings: bookings are contracted value closed in a period; ARR is a recurring run-rate snapshot (MRR * 12). They answer different questions.
Example
If you sign a $120k annual deal with a $10k one-time onboarding fee, bookings are $120k while ARR is $110k.
How to use it
- Use bookings to evaluate sales performance and contracted demand.
- Use ARR to compare recurring scale and momentum over time.
- If you sell annual prepay, bookings and cash can spike while ARR moves more steadily.
Common mistakes
- Treating bookings as recurring run-rate.
- Comparing bookings to ARR without excluding one-time services and setup fees.
- Ignoring term length and billing timing when comparing periods.
Why this matters
This term matters because small changes compound in SaaS metrics. Use consistent definitions by cohort and segment so you can diagnose retention, payback, and growth quality.
Practical checklist
- Write a 1-line definition for "ARR vs Bookings" that your team will use consistently.
- Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
- Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
- Use a calculator that references this term (e.g., Bookings vs ARR Calculator) to sanity-check assumptions.
- Read the related guide (e.g., Bookings vs ARR: what ARR means (and what it doesn't)) for context and common pitfalls.
Where to use this on MetricKit
Calculators
- Bookings vs ARR Calculator: Compare bookings vs ARR (and cash) for a contract with term length and one-time fees.
Guides
- Bookings vs ARR: what ARR means (and what it doesn't): Bookings vs ARR explained: what ARR is (and isn't), plus how it differs from bookings and cash receipts.
- Bookings vs ARR: definitions, formulas, and examples: Bookings vs ARR explained (ARR vs bookings): what each metric measures, the formulas, and how to avoid common mistakes with annual prepay and one-time fees.
- Deferred revenue: bridge billings to recognized revenue (with formulas): A practical guide to deferred revenue: what it is, why billings and recognized revenue differ, and how to use a rollforward to stay consistent.