Subscription & SaaS Glossary
126 key terms and concepts for understanding subscriptions, SaaS metrics, billing, and subscription management.
All Terms A-Z
A
A/B Testing
A method of comparing two versions of a subscription offering (pricing, features, UI) to determine which performs better.
Activation
The moment when a new subscriber first experiences meaningful value from a service, increasing their likelihood of long-term retention.
Annual Subscription
A subscription plan billed once per year, typically offering a discount compared to the equivalent monthly pricing.
API Access
The ability to programmatically interact with a subscription service through its Application Programming Interface.
ARPU
Average Revenue Per User — the average monthly or annual revenue generated per subscriber, calculated by dividing total revenue by total subscribers.
ARR
Annual Recurring Revenue — the annualized value of recurring subscription revenue, calculated as MRR multiplied by 12.
Auto-Renewal
A feature that automatically renews a subscription at the end of each billing cycle without requiring manual action from the user.
B
C
Cancellation
The act of ending a subscription, which stops future billing and eventually terminates access to the service.
Churn Prevention
Strategies and tactics employed by subscription services to retain customers and reduce cancellation rates.
Churn Rate
The percentage of subscribers who cancel their subscription during a given time period, typically measured monthly or annually.
Churn Survey
A questionnaire presented to subscribers during or after the cancellation process to understand their reasons for leaving.
Cloud Computing
The delivery of computing services — including servers, storage, databases, and software — over the internet on a subscription or pay-per-use basis.
Cohort Analysis
A technique that groups subscribers by their sign-up date to analyze retention, behavior, and revenue patterns over time.
Committed Use Discount
A reduced rate offered by subscription services in exchange for committing to a minimum usage level or contract duration.
Consumer Rights
Legal protections for subscription consumers, including rights to cancel, obtain refunds, and receive transparent billing information.
Content Gating
The practice of restricting access to digital content behind a registration, subscription, or payment requirement.
Conversion Rate
The percentage of users who upgrade from a free plan or trial to a paid subscription.
Credit Card Updater
An automated service that updates expired or replaced credit card details with subscription merchants to prevent payment failures.
Customer Acquisition Cost
The total cost of sales and marketing efforts required to acquire a new paying subscriber, calculated as total acquisition spend divided by new customers gained.
Customer Success
A proactive function within subscription companies focused on helping customers achieve their desired outcomes and maximize value from the service.
D
Dark Patterns
Deceptive user interface designs that trick subscribers into actions they did not intend, such as making cancellation unnecessarily difficult.
Data Portability
The ability to easily export and transfer your data from one subscription service to another in a usable format.
Deferred Revenue
Payment received for subscription services that have not yet been delivered, recorded as a liability until the service is provided.
Digital Subscription
A recurring payment for access to digital content, software, or online services delivered electronically.
Discount Code
A promotional code that provides a reduced price or additional benefits when subscribing to a service.
Downgrade
Switching from a higher-priced subscription plan to a lower-priced one, typically with fewer features or reduced limits.
Dunning
The automated process of retrying failed subscription payments and communicating with subscribers about payment issues to recover revenue.
Dunning Management
The systematic process of communicating with subscribers about failed payments and recovering revenue through automated retry strategies.
E
F
Family Plan
A subscription tier that allows multiple household members to share one subscription at a discounted per-person rate.
Feature Flag
A configuration toggle that allows subscription services to enable or disable features for specific users or subscription tiers.
Free Tier
A permanent free access level for a subscription service that provides basic functionality without any payment required.
Free Trial
A limited-time period where users can access a subscription service at no cost before committing to a paid plan.
Freemium
A pricing model that offers basic features for free while charging for premium features, storage, or usage beyond free tier limits.
Freemium Conversion
The process and rate at which users of a free product tier upgrade to a paid subscription plan.
G
Grace Period
A short window of time after a payment fails or a subscription expires during which the service remains accessible before being suspended.
Grandfathering
The practice of allowing existing subscribers to keep their current pricing or plan terms when a service changes its pricing structure.
Gross Churn
The total revenue lost from cancellations and downgrades in a period, before accounting for expansion revenue from existing customers.
Gross Margin
The percentage of subscription revenue remaining after deducting the direct costs of delivering the service.
I
L
Lifetime Deal
A one-time payment that grants permanent access to a subscription service, eliminating ongoing recurring charges.
Lifetime Value
The total revenue a business expects to earn from a single customer account over the entire duration of their subscription relationship.
Lock-In
A situation where switching from one subscription service to another becomes difficult or costly due to data, workflows, or ecosystem dependencies.
Loyalty Program
A structured reward system that incentivizes continued subscription by offering benefits based on tenure or engagement level.
M
Marketplace
A platform where multiple subscription services can be discovered, compared, and purchased from a single location.
Metered Billing
A billing method where subscription charges are calculated at the end of each period based on actual usage during that period.
Monthly Subscription
A subscription plan that charges the user once per month, offering flexibility to cancel at any time.
MRR
Monthly Recurring Revenue — the predictable total revenue a subscription business expects to earn each month from all active subscriptions.
Multi-Tenancy
A software architecture where a single instance serves multiple customers (tenants) while keeping their data isolated.
N
Negative Churn
A situation where expansion revenue from existing subscribers exceeds the revenue lost from cancellations and downgrades.
Net Revenue Retention
A metric measuring the percentage of recurring revenue retained from existing customers, including expansions, contractions, and churn.
Notification Preferences
User settings that control what communications are received from subscription services, including email, push, and SMS alerts.
O
P
Pause Subscription
The option to temporarily suspend a subscription and stop billing without fully canceling the account.
Payback Period
The number of months it takes for a subscription business to recover its customer acquisition cost from a subscriber's payments.
Payment Date
The specific day within each billing cycle when a subscription payment is processed and charged to the subscriber's payment method.
Payment Gateway
A service that processes credit card and electronic payment transactions for subscription businesses.
Payment Method
The financial instrument used to pay for a subscription, such as a credit card, debit card, PayPal, or bank account.
Paywall
A digital barrier that restricts access to content unless the user pays a subscription fee or one-time charge.
PCI Compliance
Adherence to the Payment Card Industry Data Security Standard for handling credit card information in subscription billing.
Platform Fee
A charge levied by a marketplace or platform for facilitating transactions between buyers and sellers.
Platform Risk
The risk that a subscription service you depend on changes its terms, pricing, or features in ways that negatively impact your use.
Price Anchoring
A psychological pricing technique where an expensive option is displayed first to make other subscription tiers seem more affordable by comparison.
Price Discrimination
The practice of charging different prices to different customer segments for essentially the same subscription service.
Price Increase
When a subscription service raises its pricing, affecting existing and/or new subscribers.
Pricing Model
The strategy a subscription service uses to structure its pricing, including flat-rate, tiered, usage-based, or hybrid approaches.
Product-Led Growth
A business strategy where the product itself drives customer acquisition, retention, and expansion through free tiers and self-serve experiences.
Prorated Credit
A partial refund or account credit given when downgrading or canceling a subscription before the end of the paid period.
Proration
The calculation of a proportional charge or credit when changing subscription plans mid-billing cycle.
R
Recurring Billing
An automatic payment system that charges a customer at predetermined intervals for ongoing access to a product or service.
Recurring Expense
Any regular, predictable cost that occurs at set intervals, with subscriptions being the most common type of recurring expense.
Recurring Revenue
Income that a business can reliably expect to receive at regular intervals from active subscriptions.
Referral Program
An incentive system where existing subscribers earn rewards for successfully inviting new customers to subscribe.
Refund
The return of subscription payment to the customer, typically when cancelling within a specified window or due to service issues.
Renewal Reminder
A notification sent before a subscription auto-renews, alerting the subscriber about the upcoming charge and renewal date.
Retention Offer
A special discount or incentive offered to subscribers who attempt to cancel, designed to convince them to stay.
Retention Rate
The percentage of subscribers who continue their subscription over a given period, calculated as the inverse of churn rate.
Revenue Recognition
The accounting principle determining when subscription revenue should be recorded on financial statements.
S
SaaS
Software as a Service — a software distribution model where applications are hosted in the cloud and accessed via subscription rather than installed locally.
Seat-Based Pricing
A pricing model where subscription cost is determined by the number of individual users (seats) who access the service.
Self-Hosted Alternative
An open-source or self-managed version of a subscription service that you run on your own infrastructure instead of paying recurring fees.
SLA
Service Level Agreement — a contract defining the expected level of service, uptime guarantees, and remedies if those levels are not met.
Streaming
The continuous transmission of audio or video content over the internet, allowing immediate playback without downloading files first.
Student Discount
A reduced subscription price offered to enrolled students, typically requiring verification of active student status.
Subscription
A recurring payment arrangement where a customer pays at regular intervals to access a product or service.
Subscription Analytics
The practice of tracking and analyzing metrics related to subscription businesses, including revenue, churn, and customer behavior.
Subscription API
A programming interface provided by payment platforms that enables developers to create and manage subscription billing in their applications.
Subscription Audit
A systematic review of all active subscriptions to evaluate their value, identify unused services, and optimize spending.
Subscription Box
A recurring delivery of curated physical products shipped to subscribers on a regular schedule, typically monthly.
Subscription Bundle
A package that combines multiple subscription services together at a discounted price compared to subscribing to each individually.
Subscription Compliance
Adherence to legal and regulatory requirements governing subscription billing, cancellation, and consumer communication.
Subscription Creep
The gradual, often unnoticed increase in the number and total cost of subscriptions over time.
Subscription Economy
The economic shift from one-time purchases to recurring subscription-based business models across industries.
Subscription Fatigue
The feeling of being overwhelmed by the number of active subscriptions and the cumulative cost of maintaining them.
Subscription Fraud
Deceptive practices involving subscriptions, including unauthorized charges, fake free trials, and stolen payment credentials used for sign-ups.
Subscription Intelligence
The use of data analytics and AI to gain insights about subscription spending patterns, usage trends, and optimization opportunities.
Subscription Lifecycle
The complete journey of a subscriber from initial awareness through trial, activation, engagement, renewal, and eventual churn.
Subscription Management
The ongoing process of tracking, optimizing, and controlling all active subscriptions to ensure maximum value and minimum waste.
Subscription Marketplace
An online platform that curates, compares, and facilitates the purchase of multiple subscription services in one place.
Subscription Portfolio
The complete collection of all active subscriptions held by an individual or organization, viewed as a managed set of investments.
Subscription ROI
The return on investment from a subscription, measured by the value or savings generated relative to the subscription cost.
Subscription Savings
The money saved by optimizing subscriptions through cancelling unused services, downgrading plans, switching to annual billing, or using bundles.
Subscription Spending
The total amount of money allocated to all active subscription services over a given time period.
Subscription Stacking
The strategy of combining multiple complementary subscriptions to create a comprehensive solution for a specific need.
Subscription Tier
A specific pricing level within a tiered subscription model, each offering a different combination of features, limits, and price.
Subscription Tracker
A tool or application that helps users monitor, manage, and optimize all their active subscriptions in one centralized dashboard.
Switching Cost
The time, effort, and money required to migrate from one subscription service to a competing alternative.
T
Tax Compliance
The requirement for subscription services to correctly calculate, collect, and remit sales tax or VAT based on subscriber location.
Tiered Pricing
A pricing strategy where a service offers multiple plan levels with different feature sets and price points to serve different customer segments.
Total Cost of Ownership
The complete cost of a subscription over its entire lifecycle, including the subscription fee, setup costs, training, and switching costs.
Trial Conversion
The process and rate at which free trial users become paying subscribers after their trial period ends.
U
Unit Economics
The direct revenues and costs associated with a single subscriber, used to determine the profitability of each customer.
Upsell
A sales technique where a subscription service encourages existing users to upgrade to a higher-priced plan with more features.
Usage-Based Pricing
A pricing model where customers pay based on how much they use a service rather than a fixed subscription fee.
V
Viral Loop
A growth mechanism where existing subscribers naturally invite others to join, creating a self-reinforcing cycle of user acquisition.
Virtual Credit Card
A temporary or limited-use digital card number that can be used for subscription payments to enhance security and control.
Voluntary Churn
Subscriber cancellations that occur by the customer's deliberate choice, as opposed to involuntary churn from payment failures.
W
Webhook
An automated notification sent from a subscription service to your application when specific events occur.
White-Label
A subscription product or service that can be rebranded and resold by another company as their own.
Win-Back Campaign
A marketing strategy designed to re-engage and reactivate former subscribers who have cancelled their subscriptions.
Browse by Category
Billing & Payments
Business Metrics
- Churn Rate
- MRR
- ARR
- Lifetime Value
- Customer Acquisition Cost
- Conversion Rate
- ARPU
- Retention Rate
- Net Revenue Retention
- Cohort Analysis
- Expansion Revenue
- Voluntary Churn
- Involuntary Churn
- Subscription Analytics
- Engagement
- Activation
- Viral Loop
- Trial Conversion
- Freemium Conversion
- Gross Churn
- Quick Ratio
- Payback Period
- Negative Churn
- Subscription Intelligence
Subscription Management
- Subscription Fatigue
- Subscription Audit
- Subscription Creep
- Cancellation
- Subscription Bundle
- Downgrade
- Subscription Savings
- Subscription Tracker
- Dark Patterns
- Win-Back Campaign
- Family Plan
- Lock-In
- Switching Cost
- Data Portability
- Churn Prevention
- Onboarding
- Referral Program
- Loyalty Program
- Pause Subscription
- Renewal Reminder
- Subscription Management
- Subscription Fraud
- Consumer Rights
- Notification Preferences
- Subscription Stacking
- Customer Success
- Churn Survey
- Retention Offer
- Platform Risk
- Subscription Portfolio
Finance & Pricing
- Tiered Pricing
- Payment Method
- Upsell
- Budgeting
- Usage-Based Pricing
- Price Increase
- Seat-Based Pricing
- Platform Fee
- Student Discount
- Recurring Revenue
- Revenue Recognition
- Deferred Revenue
- Unit Economics
- Gross Margin
- Pricing Model
- Price Anchoring
- Discount Code
- Committed Use Discount
- Total Cost of Ownership
- Recurring Expense
- Subscription ROI
- Virtual Credit Card
- Subscription Spending
- Price Discrimination
- Lifetime Deal
General Concepts
- Subscription
- SaaS
- Free Trial
- Freemium
- Cloud Computing
- Subscription Economy
- Paywall
- Content Gating
- Subscription Box
- Digital Subscription
- Streaming
- Free Tier
- SLA
- API Access
- Webhook
- Multi-Tenancy
- White-Label
- Product-Led Growth
- Subscription Lifecycle
- Marketplace
- Feature Flag
- A/B Testing
- Subscription Tier
- Subscription API
- Subscription Marketplace
- Self-Hosted Alternative
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