Softrax

SaaS and Revenue Management Glossary

A  |  B  |   C  |  D  |   E  |  F  |  G  |  H  |   I  |  J  |  K  |  L  |  M  |  N  |  O  |  P  |  Q  |  R  |  S  |  T  |  U  |  V  |  W  |  X  |  Y  |  Z

A

Account hierarchy is a way of organizing accounts in which companies are ranked one above the other according to status or authority.

Accounts receivable aging report is a record that can be generated to see which customers have overdue invoices or outstanding bills in their account.

Accrued revenue is income that a company has earned, but has not yet received from a customer.

Annual recurring revenue, or ARR, is all ongoing revenue that has been projected to be received over the course of one year.

Average revenue per user, or ARPU, is a metric that estimates the amount of money a company can receive from an individual customer over the course of the partnership.

B

Booking is a metric that estimates the value of a contract signed with a new customer for a set period of time.

C

Cart abandonment is when a shopper adds items to their cart on an online store, but does not complete the purchase.

Checkout is an event where a customer submits account and payment information to a person or company to receive a good or service.

Churn rate is a metric that measures the rate at which customers stop doing business with a company over a set period of time.

Committed monthly recurring revenue, or CMRR, is a metric that represents the monthly billed amount of subscription revenue.

Competitive pricing is a strategy where business will set their prices lower than a competitor’s known prices.

Consolidated invoicing is the act of combining multiple invoices into a single invoice.

Consumption billing is a pricing model that businesses and service providers use to charge customers based on the actual quantity or usage of a product or service.

Credit notes are memos sent from a seller to a buyer to notify them that a payment is being applied to their account.

Current ratio is a metric that calculates the relationship between a company’s assets and liabilities.

Customer acquisition cost, or CAC, is the amount of money a company spends to attain a new customer.

CAC payback, or customer acquisition cost payback, is the amount of time it will take to recover the cost of attaining a new customer.

Customer lifetime value, or CLV, is a metric that qualifies the value of a customer to a company over the entire span of the relationship.

D

Deferred revenue is payments received in advance for products or services that will be performed or delivered in the future.

Dunning is the process of asking for payment from customers with overdue bills.

F

A free trial is a product or service offered at no cost for a set period of time, typically anywhere from seven to thirty days.

Freemium is a type of business model where basic features of a product or service is offered for no cost, but charges for advanced or additional features.

Friendly fraud, also called chargeback fraud, is when a customer uses a credit card for payment, but then identifies the purchase as fraudulent and disputes the charge with the credit card company for their money back.

G

Gross margin is a metric used to measure a company’s gross profit against its revenues as a percentage.

Gross retention is a metric that measures how much MRR is retained each month after the effects of churn or downgrades to a product or service.

L

Logo churn, also called customer churn, is the percentage of customers who cancel a subscription after a set period of time.

The LTV CAC Ratio, or customer lifetime value to customer acquisition cost ratio, is a metric that measures the relationship between the lifetime value of a customer and the cost of acquiring that customer.

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M

Monthly recurring revenue, or MRR, is the total revenue generated by a business from current active subscriptions predicted for a month.

N

Net dollar retention measures the amount of revenue a company keeps and expands in an existing customer base.

Net MRR growth, or net monthly recurring revenue growth, measures the value of new accounts to a company’s sales system and added value to current accounts within a month, minus accounts that have been closed or reduced.

O

Operating expenses, sometimes shortened to OpEx, is the total cost a company spends to keep the business running.

Order to cash, or O2C is the process a customer goes through from when the customer places the order up until payment is received and applied to their account.

P

Pay as you go pricing, or PAYG Pricing is a pricing model where a customer only pays based off of how much they use or consume.

Payment methods are the options available for customers to use to purchase a product or service.

Prorated is when the amount a customer needs to pay is adjusted and based on the number of days they used a service or product.

R

Recurring billing is a type of billing model that allows a business to receive ongoing payments, but get payment information from the customer only once.

A recurring payment is the repeated payment a customer makes for products or services based on a set schedule.

Renewal rate is a percentage measured of customers who continue their subscriptions at the end of each subscription period.

Revenue churn is a percentage measured of money lost from subscriptions that are not renewed at the end of the subscription period.

Revenue projections are the amount of revenue a company is estimated to earn over a set period of time.

Revenue run rate is a projected estimate of upcoming revenue based on previously earned revenue over a set period of time.

S

Subscription billing is a model in which customers are charged on a regular basis (such as monthly, quarterly, or annually) for access) to a product or service.

Subscription churn is the number of customers that do not renew scheduled payments for a company’s product or service.

Subscription management is the process of monitoring a customer’s subscription for a product or service.

Subscription models are a business model where a customers pay a recurring charge for a product or service.

T

Total contract value, or TCV, measures the complete amount of revenue a customer generates during their contract with a company.

U

Unbilled AR, or unbilled accounts receivable, is the amount of revenue that is recognized but has not yet been sent as an invoice to a customer.

Usage based billing, sometimes referred to as consumption billing or pay as you go pricing, is a business model where customers only pay for the amount of product or service used within a billing cycle.

V

Value based pricing is what a company charges based on what customers perceive the product or service is worth.

Volume discounting is when a lower price is offered to a customer wanting to purchase a large amount of products or services.

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