Article · 10 min read

Ramp Deal in SaaS: Definition, Billing and Revenue Recognition Guide

Ordway Labs Free Intermediate

Explains what a ramp actually costs you behind the scenes: misbilling, deferred revenue errors and ARR that stops meaning what you think it means. Read it before you agree to a three year step up on a spreadsheet.

• A ramp deal is one contract with scheduled step ups, for example 2,000 dollars a month in year 1, 4,000 in year 2, 6,000 in year 3.
• ARR and MRR should reflect the rate for the period being measured, not the average across the term.
• Ramps complicate ASC 606 because the transaction price has to be allocated across performance obligations.
• Without automation you misbill, miss revenue, and overstate the forecast.