What exactly is this guide about? Well, an alternate title for this post could be: The complete guide to understanding the relationship between SaaS sales, bookings, billings, cash, revenue, MRR, and ARR. 

At their core, SaaS revenues are simple. You sell 100 subscriptions at $100/mo, you make $10k per month or $120k per year. But as your business grows more complex, your sales team, finance department, and investors will all focus on different aspects of your revenue. In this post we’ll use a simple example to explain what all these different takes on revenue are, how to calculate them, and why they matter.

In our example, we sell a $60,000/yr annual subscription. To keep things simple, we’ll assume we sell one subscription per month and everyone always renews. Let’s also assume our customers pay us in one lump-sum payment, but it takes two months to receive payment from them. Finally, it takes three months of consulting, customization, and configuration before customers can actually start using our service.

How does all of this impact revenue? Well, depending on which way you’re looking at it, in January 2017 you could be talking about: