Resources Glossary
Billing, defined plainly.
82 terms from subscription billing, usage pricing, payments, collections and revenue accounting, defined plainly and linked to each other.
Pricing models
6Graduated pricing
The precise name for tiered pricing where each band is charged at its own rate rather than repricing the whole quantity.Hybrid pricing
A fixed platform or seat fee combined with a usage component. The most common shape in modern SaaS.Seat-based pricing
Charging per user or per licence, the most common model in B2B software.Tiered pricing
Unit prices that change as volume crosses thresholds, with each tier applying only to the units inside it.Usage-based pricing
Charging by what the customer consumes rather than by a fixed subscription fee. Also called consumption or metered pricing.Volume pricing
A single unit price determined by total volume, applied retroactively to every unit once a threshold is crossed.Catalog
5Add-on
An optional purchasable extra attached to a subscription, billed alongside the base plan.Grandfathering
Leaving existing customers on the pricing they signed up to when new pricing is introduced.Plan
A named, purchasable package of prices and entitlements. The thing a customer subscribes to.Price version
An immutable snapshot of a plan price. New subscriptions get the current one; existing subscriptions keep theirs.Product catalog
The structured set of products, plans, prices, add-ons and entitlements a business sells.Billing mechanics
12Anniversary billing
Billing each customer on the date they subscribed, so renewal dates are spread across the month.Billing cycle
The recurring period a subscription is invoiced for, and the run that generates those invoices.Calendar billing
Billing every customer on the same date, usually the first of the month, with a prorated first invoice.Commitment
A contracted minimum spend over a term, usually in exchange for a lower rate.Drawdown
Consuming a prepaid or committed balance, reducing it as usage is rated.Entitlement
What a customer is allowed to use because of the plan they are on: which features, and up to what limits.Feature flag vs entitlement
A flag controls whether code is switched on. An entitlement controls whether a customer has bought it. Conflating them causes revenue leakage.Meter
The definition of what is measured and how it aggregates: which events count, over what period, summed or maximum or counted.Metered billing
Collecting usage events during a period and rating them into invoice lines when the period closes.Overage
Usage beyond an included allowance or commitment, charged at a separate rate.Prepaid credits
A balance a customer buys up front and draws down as they consume, sometimes at a discount to pay-as-you-go.Proration
Charging or crediting for part of a billing period when a subscription changes mid-cycle.Lifecycle
6CPQ (Configure, Price, Quote)
Assembling a valid deal, pricing it correctly and getting it approved: the front half of quote-to-cash, before an order exists.Free trial
A time-limited period of full or partial access before billing starts, with or without a payment method collected.Freemium
A permanently free tier with limits, intended to convert a small share of users to paid over time.Pause and resume
Temporarily suspending a subscription and its billing, with a defined effect on entitlements and the renewal date.Q2C (Quote-to-Cash)
The whole span from configuring a deal to collecting the money: CPQ, approvals, order, subscription, invoice and payment, treated as one process.Upgrade and downgrade
A subscription moving between plans, with proration, entitlement changes and revenue effects that differ by direction.Invoicing
3Consolidated invoicing
Combining charges from several subscriptions, entities or products onto a single invoice per customer.Credit note
A document that reduces or cancels an amount previously invoiced, used for refunds, corrections and downgrades.Invoice
The document that states what a customer owes for a period, line by line, with tax and totals.Payments
13Account updater
A card network service that supplies updated card details when a stored card is reissued, expired or replaced.Authorization and capture
Authorization reserves funds; capture takes them. The gap between the two is where a lot of billing logic lives.Card on file
A stored payment credential used for future charges, subject to specific network rules and consent requirements.Chargeback
A cardholder disputing a charge with their bank, reversing the payment and adding a fee regardless of the outcome.Decline code
The reason an issuer gave for refusing a payment. The difference between a soft and a hard decline decides what to do next.Direct debit (ACH, SEPA, BACS)
Pulling funds directly from a bank account under a mandate. Cheaper and more durable than cards, but slower and reversible for longer.Payment gateway and processor
The gateway routes a transaction; the processor moves the money. Many products do both, which is why the terms blur.PCI DSS
The card industry security standard governing how card data is handled. Most subscription businesses aim to stay in the lightest scope.PSP (Payment Service Provider)
A provider that bundles gateway, processing and merchant services so a business can take payments without its own acquiring relationship.Refund
Returning money already captured, as opposed to reducing an outstanding balance with a credit note.SCA and 3-D Secure
Strong Customer Authentication, the European requirement for two-factor verification on many card payments, implemented through 3-D Secure.Settlement and payout
Funds moving from the card networks to your bank account, usually in batches and net of fees.Tokenization
Replacing card details with a meaningless reference, so the sensitive number never reaches your systems.Collections
7Ageing (AR ageing)
Outstanding receivables grouped by how overdue they are, usually in 30-day buckets.Bad debt and write-off
Receivables judged uncollectable, provisioned against and eventually removed from the books.Collections
The process of recovering invoices that are past due, from reminders through to escalation and write-off.DSO (Days Sales Outstanding)
The average number of days it takes to collect payment after invoicing.Dunning
The automated sequence of retries and reminders that recovers a failed recurring payment before the subscription is lost.Net terms
How long a customer has to pay after an invoice is issued. Net 30 means thirty days.Smart retries
Scheduling payment retries based on the decline reason, the card type and local timing rather than at fixed intervals.Revenue accounting
7ASC 606 and IFRS 15
The converged accounting standards for revenue from contracts with customers, built on a five-step model.Bookings, billings and revenue
Three different numbers that are routinely confused: what was contracted, what was invoiced, and what has been earned.Deferred revenue
Money received for service not yet delivered. A liability, not revenue, until it is earned.Multi-currency billing
Pricing, invoicing and settling in a customer local currency while reporting in one currency at the group level.Multi-entity billing
Billing from more than one legal entity, each with its own books, tax registration and invoice numbering, consolidated into one group view.Reconciliation
Matching what you invoiced to what you were paid to what landed in the bank, and explaining every difference.Revenue recognition
Determining when revenue is earned rather than when it was invoiced or paid.Revenue metrics
11ARPA (Average Revenue Per Account)
MRR divided by the number of active accounts. Also seen as ARPU, where the unit is a user rather than an account.ARR (Annual Recurring Revenue)
The annualised value of your recurring subscriptions, normally MRR multiplied by twelve, used as the headline size of a subscription business.Churned MRR
Recurring revenue lost from customers who cancelled outright in the period, whether they chose to leave or their payments stopped working.Contraction MRR
Recurring revenue lost from customers who stayed: downgrades, removed seats, dropped add-ons and reduced commitments.Expansion MRR
Additional recurring revenue from existing customers: upgrades, added seats, add-ons and contracted usage growth, excluding anything from new customers.GRR (Gross Revenue Retention)
Revenue retained from an existing cohort with expansion excluded, so it can never exceed 100%. The measure of how much you keep.MRR (Monthly Recurring Revenue)
The normalised monthly value of every active recurring subscription, with annual and multi-month plans spread evenly across the months they cover.Net new MRR
The month-over-month change in MRR, built from new, expansion, contraction and churned MRR. The single number that says whether the business grew.NRR (Net Revenue Retention)
Revenue this period from a cohort of existing customers, divided by what that same cohort paid a year ago, including expansion, contraction and churn.Rule of 40
Revenue growth rate plus profit margin. A rough test of whether a software business is balancing growth and profitability.SaaS quick ratio
New plus expansion MRR divided by contraction plus churned MRR. How much growth survives the leak.Retention
4Cohort analysis
Grouping customers by when they started and tracking each group over time, so retention and expansion can be read without new customers hiding them.Customer churn
The share of customers who cancelled in a period, counted as logos rather than as revenue.Involuntary churn
Customers lost because a payment failed rather than because they chose to leave. Usually the cheapest churn to recover.Retention curve
The share of a cohort still active plotted against months since they started. Whether it flattens is the single most important thing about it.Unit economics
6Burn multiple
Net cash burned divided by net new ARR added. How much cash it costs to buy a pound of new recurring revenue.CAC (Customer Acquisition Cost)
Total sales and marketing spend in a period divided by the customers acquired in it.CAC payback period
How many months of gross profit from a new customer it takes to earn back what you spent acquiring them.LTV (Customer Lifetime Value)
The total gross profit expected from a customer across their whole relationship with you.LTV:CAC ratio
Lifetime value divided by acquisition cost. A rule of thumb for whether growth spending is productive.Magic number
Net new ARR in a quarter divided by the previous quarter sales and marketing spend. A sales-efficiency measure.A term we have missed?
This glossary is the vocabulary Occurly is built on, so if something here reads as wrong or incomplete, that is worth knowing.