SaaS Billing Glossary
Definitions for key subscription billing, revenue metrics, and compliance terms used in Indian SaaS.
MRR (Monthly Recurring Revenue)
The predictable monthly revenue from all active subscriptions. Calculated as the sum of all monthly subscription values, with annual subscriptions normalized to monthly (Annual Value ÷ 12).
ARR (Annual Recurring Revenue)
MRR × 12. The annualized view of recurring revenue. Used for board reporting, investor discussions, and valuation benchmarking.
ARPA (Average Revenue Per Account)
MRR ÷ Number of Active Customers. Measures the average monthly revenue generated per customer. Rising ARPA with stable customer count signals healthy upsell.
Churn Rate
The percentage of customers or revenue lost in a period. Customer churn = customers lost ÷ customers at start of period. Revenue churn = MRR lost to cancellations ÷ starting MRR.
Net Revenue Retention (NRR)
(Starting MRR + Expansion MRR - Contraction MRR - Churned MRR) ÷ Starting MRR × 100. Can exceed 100% if expansion outpaces churn. World-class SaaS: >120%.
Dunning
The process of communicating with customers to collect payment on past-due accounts. In subscription billing, dunning campaigns are sequences of email messages sent after a payment fails.
Proration
The calculation of a proportional charge when a subscription changes mid-billing-cycle. If a customer upgrades on day 15 of a 30-day cycle, they pay half the price difference for the remaining 15 days.
Subscription Lifecycle
The full set of states a subscription can move through: trial → active → paused → cancelled → reactivated. Each transition may trigger invoices, emails, and analytics events.
GST (Goods and Services Tax)
India's unified indirect tax system. For SaaS (SAC Code 998314), GST is 18%. Intra-state: CGST 9% + SGST 9%. Inter-state: IGST 18%. Exports: zero-rated.
RBAC (Role-Based Access Control)
A security model where access to features and data is determined by a user's assigned role. Roles have permissions across modules (e.g., view, create, edit, delete for Subscriptions).
Involuntary Churn
Subscription cancellations caused by failed payments (card expiry, insufficient funds) rather than customer intent. Typically 1-3% of MRR/month. Recoverable through dunning.
Tiered Pricing
A pricing model where the price per unit changes based on volume ranges. Example: ₹100/unit for 0-100 units, ₹80/unit for 101-500, ₹60/unit for 500+.
Usage-Based Billing
A pricing model where charges are based on actual consumption of a product or service. Common in infrastructure, API, and platform products. Requires metering of usage data.
Discount Cycle
A configured discount applied for a specific number of billing cycles (fixed-cycle) or indefinitely (forever). Discount cycles are validated to prevent conflicting or stacking discounts.
Webhook
An HTTP callback triggered when a specific event occurs in the system. In subscription billing: subscription.created, payment.failed, invoice.generated, etc. Allows external systems to react to billing events in real-time.
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