SUBSCRIPTION MANAGEMENT GLOSSARY OF TERMS

A

Accounting Code

In modern accounting systems, a unique alpha/numerical reference given to a specific revenue or customer account to facilitate the reconciliation of transactions across various systems including subscription management and billing, CRM, and accounting.

Activation Fee

A one-time fee paid in exchange for initiation of service.

ACV (Annual Contract Value)

Calculated as the total recurring charges fees on a subscription, ACV is one of the most important metrics for subscription or SaaS businesses.

Amendment

A change made to a contract or subscription, such as a change in product or edition (e.g. upgrade or downgrade), number of users, payment terms, or a contract renewal.

APIs

Application Programming Interface (API)s is a set of routines, data structures, object classes and/or protocols provided by libraries and/or operating system services in order to support the building of applications.

Authorize.Net

Authorize.Net , a CyberSource solution, is a payment gateway service provider allowing merchants to accept credit card and electronic checks payments through their website.

C

Churn

A measure of customer attrition, calculated as the number of customers who discontinue service during a specified time period, divided by the total number of customers at the start of that period. Churn is an operational metric used to gauge the overall health of a subscription business. Churn is measured in units or dollars.

Close Rate

Sales terminology for the percent of sales prospects which result in actual paying business.

Cloud Computing

Cloud computing is a style of computing in which dynamically scalable and often virtualized resources are provided as a service over the Internet.

Contract Effective Date

Represents the date from which the contract terms take effect. The date also can determine when certain charges can be billed to the customer, and often coincides with the start of the subscription term.

Conversion Rate

Calculated as the percentage of users whose status changes, e.g from an Internet search to a click on a link or paid ad; from a website visitor to a known lead (through completion of a web form or inbound contact), a free trial or free product user to a paid susbcriber, etc. Subscription businesses depend upon known conversion rates to monitor the health of the business and to predict future pipeline and revenue.

Coupon/Promo Code

Coupon or promo codes are used by subscription companies to provide prospects with specialized pricing as an incentive to sign up. They are also used to track the effectiveness of various marketing campaigns.

Customer Acceptance Date

The date from which the customer has accepted the delivery of the subscription or change order associated with the subscription. The date can also determine when certain charges can be billed to the customer.

D

Dashboard

A graphical representation of key business metrics such as MRR (hyperlink to each key metric), ACV/TCV, churn, conversion and close rates. Often resembling a pilot’s cockpit, the dashboard provides a snapshot of the health of the subscription business.

Downgrade

A downgrade is a change order or amendment to an existing contract or subscription where a customer chooses a lower service level. This can be a less expensive service offering, or a smaller quantity (users, usage-level, etc.). Depending on business rules, this change may result in a prorated credit of the original service and/or a penalty fee associated with the change.

Due Upon Receipt

Payment term in which payment is due immediately upon receipt of invoice.

E

Edition

In order to fully monetize a recurring revenue model, many subscription companies use pricing and packaging strategies to reach multiple market segments. Typically the flagship product includes highly utilized high-value features, whereas lower, entry-level editions offer fewer product features at a lower cost.

Electronic Payment

Any non-paper based form of payment; e.g. ACH, wire transfer, credit or debit card, PayPal.

Evergreen

A subscription that remains active until the subscriber cancels.

I

Invoice-to-Collect

Part of the order-to-cash process that refers to the collection of payments from the customer, based on an invoice. The process includes invoice creation, collection management and dispute management, if any.

M

MRR (Monthly Recurring Revenue)

Calculates subscription fees normalized to a monthly value. Does not include set up, activation, or overage costs. MRR is a key metric for subscription businesses.

O

Order-to-Cash

Order-to-cash refers to the process in which a customer places an order, either via a website or through a sales rep, provision of the service, generating an invoice, and finally collecting payment for that invoice. Order-to-cash is a recurring, ongoing process in a subscription business.

Overage

Usage charges incurred when service level included in the rate plan is exceeded.

P

PaaS - Platform-as-a-Service

A comprehensive set of services that are delivered over the web including all systems and environments comprising the end-to-end life cycle of developing, testing, deploying and hosting web applications. E.g. Force.com, Google App Engine, Amazon EC2.

PCI Compliance/PCI DSS (Payment Card Industry Data Security Standard)

The Payment Card Industry Data Security Standard (PCI DSS) is a set of requirements designed to ensure that ALL companies that process, store or transmit credit card information maintain a secure environment. Zuora has achieved compliance in accordance with PCI Service Provider Level1 (PCI DSS SP L1) v1.2. Zuora is listed on the VISA website as an approved provider.

Q

Quote-to-Cash

Term that refers to the end to end business process for creating a quote for a prospect or customer, order management, invoicing and cash receipt.

R

Renewal Rate

Calculated as the percentage of subscribers scheduled to expire during any one cycle who renew their subscriptions. Renewal rate is a subscription operational metric which reflects overall customer satisfaction. Can be measured on a unit or dollar value basis.

Revenue Recognition

The Revenue recognition principle is a cornerstone of accrual accounting together with matching principle. They both determine the accounting period, in which revenues and expenses are recognized. According to the principle, revenues are recognized when they are (1) realized or realizable, and are (2) earned (usually when goods are transferred or services rendered), no matter when cash is received. In cash accounting - in contrast - revenues are recognized when cash is received no matter when goods or services are sold.

S

SaaS - Software-as-a-Service

A software delivery model in which a software firm provides daily technical operation, maintenance, and support for the software provided to their client.

SAS 70

International regulatory standard developed by the American Institute of Certified Public Accountants that requires formal reviews on an organization’s control over information technology and related processes.

Sandbox

A sandbox is a separate technical environment where customers or prospects can test software or services with a subset of data without disruption to their production environment.

Set Up Fee

Also known as activation fees (hyperlink to activation fees listing), set-up fees are a one time charge levied to cover costs associated with getting a customer up and running on a service.

Shopping Cart

A shopping cart is a software application that typically runs on the computer where your website is located (the Web server), and allows your customers to do things such as search for a product in your store catalog, add a selected product to a basket, and place an order for it. For many subscription businesses, adding an item to the shopping cart is typically referred to as the “Subscribe Now” or “Order Now” processes where customer profile and payment information is collected to provision the service and commence billing.

T

TCV (Total Contract Value)

Calculates the total recurring charges over the lifetime of a subscription. TCV is a key performance metric for SaaS or subscription-based businesses. For instance, a three year contract billed annually at $50,000 per year would have a total contract value of $150,000, assuming there were no activation or set up fees.

Tiered pricing

A common subscription and usage charge model where pricing changes are based on the incremental number of units that are purchased. For instance, 1-5 users may be charged full price and 5-10 users may receive discounted pricing. So if a customer purchases 7 units, only units 6 and 7 are discounted, where the first 5 units are charged at the full price.

U

Upgrade

A change order or amendment to an existing contract subscription where a customer chooses a higher service level. This can be a more expensive service offering, or a larger quantity (users, usage-level, etc.).

Usage Charge

Charge associated with actual consumption of a given product or service. This can be measured in terms of time on a site, gigabytes of data, number of reports generated, miles driven, or any other unit of measure.

Usage Pricing

Pricing a service or item based on its consumption or usage, rather than a flat rate for a given service or period of time.

V

Volume Pricing

A common subscription and usage charge model where pricing changes based on the total number of units that are purchased. For instance, if 1-5 users are charged full price and 5-10 users are charged at a discounted price, then a customer who purchases 7 units will pay the discounted rate on all 7 units.

W

Web Store

A web store or online store is a website where prospects can browse, select, and purchase products or services.

Z

Z-Billing

The first complete billing solution for subscription businesses. With Z-Billing 2.0, you can launch new products to market quickly, scale operations, and gain full visibility into the metrics that drive your subscription business.

Z-Payments

Built with PayPal X, Z-Payments enables subscription companies to accept traditional payments, like check or wire transfer, or online payments from popular payment gateways like PayPal, Cybersource, or Authorize.Net. Manage recurring payments, automate exception handling around any payment issues, view customer account balances, and shorten collection cycles, all in one complete solution.

Z-Force

Z-Billing and Z-Payments fully integrated with salesforce.com. With Z-Force, you can start taking orders from your website and manage those customers in salesforce.com — all without involving IT or a Web team.

Z-Commerce for Media

The first online commerce solution for publishers. Z-Commerce for Media makes it easy for publishers to monetize their online content with full subscription management, billing, and payment capabilities. Now publishers can easily launch and test new products, manage invoicing, and collect recurring revenue - as well as define content rules for their products and control access to their online content.

Z-Commerce Platform

The first open platform that makes it easy for developers to monetize Cloud Computing services. The Z-Commerce Platform provides a full commerce-as-a-service solution that lets developers plug in billing, payment, and subscription management services with just a few lines of code — and start getting paid.