Pricing Terms Glossary

A time‑series method that models trends and patterns to forecast demand.

Average revenue per account (customer).

Average revenue per user in a given period.

Grouping customers by value or needs to tailor price and service.

Behavioral bias where people rely heavily on first information presented.

Annual Contract Value; value of a contract per year.

Annual Recurring Revenue; the yearly value of all active subscriptions/contracts.

Is a software that allows different applications to communicate and exchange data.

Who must approve certain discounts or deal levels.

Pick the right set of SKUs (Stock Keeping Unit) to maximize goals within space limits.

How often an add‑on is purchased with a base product.

Contracts renew automatically unless cancelled.

The uncommitted portion of a company’s inventory and planned supply that can be confidently used to fulfill new customer orders within a specified timeframe

Average revenue per closed deal.

Establishing a reference point (e.g., sales, costs, demand) to measure impact of pricing or promotional changes.

Expected sales without promotions or unusual events.

Statistical updating of beliefs as new data arrives.

Applying behavioral economics (loss aversion, framing, decoy effects) to increase conversion and willingness to pay.

The frequency at which billing occurs (monthly, quarterly, etc.)

Leading indicator comparing signed value to billed revenue.

The price/volume combination where profit = 0; supports investment and markdown calls.

Discount applied when buying multiple items in a bundle.

Price multiple products/services together as a package.

How efficiently a company turns cash burn into growth.

The steps prospects take from awareness to purchase.

Roles involved in a B2B purchase decision.

Months needed to recover CAC (Customer Acquisition Cost) from gross margin.

The direct cost associated with generating revenue.

Forecasts that include causes like price, promo, and events.

The maximal allowable price in a market or contract.

Tension between channels (e.g., direct vs reseller) over price or margin.

Margin allocated per distribution channel.

Survey‑based model that reveals value for features and price trade‑offs.

Percent of customers or revenue lost in a period.

Statistical grouping of similar customers or products.

Configure‑Price‑Quote software that guides pricing and quoting.

A market research method that estimates part-worth utilities and WTP (Willingness to Pay) by testing attribute/price trade-offs; core to price pack architecture and offer design.

Optimization technique with constraints (e.g. capacity, rules).

Revenue minus variable costs; used for pricing and mix decisions.

Profit after direct variable cost.

Profit after direct channel cost.

Profit contribution on a per unit basis (revenue minus variable costs).

Price elasticity of demand in the digital advertising context, where changes in the CPM (price) affect the number of impressions (demand).

The direct costs incurred in producing or purchasing the goods that a company sells during a specific period.

Set price by adding a markup to cost.

All costs to fulfill and support a customer/order after gross margin.

Joint marketing funded by supplier and retailer.

When the price of one item changes, demand for related items moves too (substitutes, complements). no changes for unrelated goods.

Hold‑out testing to check model accuracy on unseen data.

Percentage of customers who buy related products.

Average sales and marketing cost to win a customer.

Total profit expected from a customer over the relationship.

Loss in economic efficiency from suboptimal pricing or taxes

Team that reviews and approves non‑standard deals.

An analytics framework to separate revenue variance into price effect, volume effect, and mix.

Offering a third option to steer customers toward a target option.

Cash collected for goods/services not yet delivered.

Estimated demand based on history, seasonality, and drivers like price.

Predicting future sales using time-series, causal, and ML models; inputs to capacity, inventory, and pricing.

Using near‑real‑time signals to adjust short‑term forecasts.

Business model where brands sell their products directly to their end customers online, through their own website/stores, bypassing traditional intermediaries.

Lowering prices to stimulate demand or close deals.

Value from the dual problem in optimization, often shadow prices.

Automatically adjust prices with demand, inventory, or competition.

EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization) as a percent of revenue.

Earnings Before Interest, Taxes, Depreciation, and Amortization; financial metric used to measure a company’s operating performance.

Statistical estimation of demand response to price.

Statistical estimation of price and promo elasticities (and cross-elasticities) to simulate scenarios and price ladders.

Acquisition price divided by a financial metric.

Pricing strategy where retailers maintain consistently low prices on products over a long period, eliminating the need for frequent sales or discounts.

Expected sale multiple at exit.

Effect of currency movement on revenue or margin.

Growth after removing currency effects.

Shows which inputs matter most to the prediction.

Percent of demand fulfilled immediately from stock.

The minimal price below which a product cannot go.

A commercial term that defines rights, obligations, or pricing protections.

Referring to the process of converting one country’s currency into another and the global market where these conversions occur.

Agreement on who pays freight and how it’s billed.

A direct-elicitation technique asking purchase intent at different prices to model demand curves and optimal price points.

Cumulative version of lift; how much signal is captured.

Pricing strategies considering competitive responses.

A clear ladder of feature/price tiers.

Tiered packages aligned to different willingness to pay.

Incremental margin from growth investments.

Use financial instruments to offset commodity or Foreign Exchange (FX) risk.

Forecast at multiple levels (SKU, category, total) coherently.

Businesses set high initial prices for products and then periodically reduce them through sales, promotions, and discounts to attract customers, create excitement, and drive sales.

Exponential smoothing method for level, trend, and seasonality.

Description of the best‑fit customer type.

 International rules defining delivery responsibility and risk.

Automatic price adjustment using an external index.

Calculate stock targets that hit service goals at lowest cost.

Demand function with constant elasticity over price.

Pre‑combined Stock Keeping Unit (SKU) sold together.

Used by shoppers to compare prices.

Start small with a customer and grow via expansion.

Time from order to delivery.

Systematic review to find and close revenue/price leaks.

Chart of model’s ability to capture positives vs random.

How products are structured across features and prices.

Public/reference price before any discounts or adjustments.

Behavioral economics concept: losses loom larger than gains.

Mean Absolute Error; average absolute difference between actual and forecast.

Mean Absolute Percentage Error; average percent error of a forecast.

Initiatives to increase profit margins through pricing, cost reduction, or mix optimization.

Bridge showing how margin evolves through deductions and costs.

The schedule of markdown steps.

Plan markdowns to clear inventory while protecting margin.

Dividing customers into distinct groups for targeted pricing.

Friction or cost of changing prices (e.g. updating catalogs).

Fine‑grained segmentation using multiple attributes.

Minimum Advertised Price; floor on public advertised price.

The sales composition across products, segments, or channels.

Shift sales mix toward higher‑margin items.

Optimization with yes/no or integer decisions (e.g., pick a price tier).

Monthly Recurring Revenue; recurring revenue recognized per month.

Customer receives the best price given to any buyer.

Optimization across multiple periods (intertemporal).

Price after all on‑invoice discounts or allowances.

How much of list/reference price is actually captured after all leakage.

Revenue after returns, discounts, and allowances.

Net Revenue Retention; revenue kept from existing customers after expansion and churn.

Offer predicted to be most relevant for a given customer.

Discount taken directly on the invoice.

Unified customer experience across online and offline channels.

A broad, inclusive online platform where a diverse range of sellers offer their ad inventory to any interested buyers through automated, real-time bidding auctions.

Operating income as a percent of revenue.

Mathematical solvers (linear/nonlinear, stochastic, reinforcement learning) that recommend profit-maximizing prices subject to constraints.

Value from preserving flexibility (e.g. waiting to sell).

Growth excluding acquisitions/divestitures and FX.

Spot and treat abnormal data points that distort analysis.

Fees for usage beyond the plan allowance.

Regression leveraging panel (time + unit) structure.

Walk from previous to current results explaining drivers like price, volume, mix, FX.

Price increase needed to offset a change in cost while keeping margin constant.

Contract term requiring equal or better price than others.

Time needed for profits to recover an investment.

When invoices must be paid (e.g., Net 30).

Intro price set low to gain share quickly.

Short profile describing goals and needs of a buyer type.

Charge per user or seat.

Qualified pipeline divided by bookings target for a period.

Profit after all discounts, rebates, and costs to serve on a transaction.

Net price minus post‑invoice items like rebates or freight allowances.

Observed spread of realized prices for comparable items.

Internal/external messaging for price changes.

The allowed price range by segment/channel/region.

How much demand changes when price changes (e.g., −1.5 means demand falls 1.5% for a 1% price rise).

A pricing concept or policy that affects how prices are set or realized.

Rules that limit discounts and guide approvals.

A pricing concept or policy that affects how prices are set or realized.

Rolling new prices through systems and channels.

Best practices in structuring and delivering price increase messages to minimize churn/attrition.

Relative price vs a benchmark or market basket; used to balance value perception and profitability.

Price or margin lost through discounts, rebates, errors, or terms.

Retailer promise to match a competitor’s price.

Change driven by different price points/tiers gaining share.

Use data and rules to recommend prices that hit goals.

Keeping the same price across channels or sites.

A commonly accepted price level in the market that consumers expect or accept.

The percentage of list price that companies actually capture after discounts, rebates, and negotiations.

System that suggests price points using data and rules.

Tendency of prices to adjust slowly due to costs, contracts, or norms

Index of how responsive a segment is to price changes.

“What-if” modeling of price, promo, mix, and cost changes to forecast revenue and margin outcomes.

Competitive reduction in prices leading to margin erosion

Step‑by‑step view from list price to pocket price and margin.

Balance between higher price and potential volume loss to hit targets.

Structuring sizes, formats, and price points to match Willingness To Pay and channel missions; e.g. foundational in Consumer Packaged Goods

Simple rules, guardrails, and approvals that control discounting and protect margin.

The plan for how a company sets and updates prices to win customers and improve margin without hurting demand.

Distributor’s price adjustment methodology.

An invite-only, real-time bidding (RTB) auction where publishers offer premium digital ad inventory to a select group of advertisers under agreed-upon terms.

Revenue as if recent acquisitions/disposals were included all period.

How deep the discount is during a promotion.

How often promotions run for a product or category.

Profit gained from a promotion divided by the cost of running it.

Extra units sold because of a promotion versus normal sales.

Likelihood that a target will purchase soon.

Likelihood a customer will leave soon.

Forecasting model that handles seasonality and holidays.

Validate that earnings are accurate and sustainable.

Segmenting customers by recency, purchase frequency, and spend.

Root Mean Squared Error; emphasizes larger errors.

Post‑purchase credit or payment tied to behavior (e.g., volume, growth).

The mental benchmark price customers expect; anchoring and decoys can shift perceived value.

Performance measure showing how much profit (or value) is gained compared to the cost of the investment.

Revenue lost due to process errors, disputes, or policy gaps.

Share of revenue by product, channel, or segment.

Find the best mix of price and demand to maximize revenue.

Projected annual revenue based on the current period.

SaaS health rule: growth rate + profit margin ≈ 40% or more.

EBITDA normalized for steady‑state operations.

Reduce or replace low‑value SKUs (Stock Keeping Unit) to improve performance.

Buffer inventory to meet the service level under uncertainty.

Average time from first qualified meeting to closed won.

Training and content that help sales sell value and price.

Build ‘what‑if’ pricing cases to assess impact.

Regular seasonal pattern that lifts or lowers demand.

Increase in purchased seats/licenses over time.

Grouping customers based on shared characteristics such as industry, behavior, or willingness to pay.

Test how results change when a key number (price, cost, volume) moves.

Probability of meeting demand without stocking out.

Implied value of relaxing a constraint (e.g. resource limit) in optimization

Model of what an item should cost based on inputs and process.

Start high to capture early adopters, then lower later.

A formal document that defines the specific deliverables, scope, timelines, responsibilities, and pricing for a given engagement under a broader agreement.

Psychological effect when price seems unusually high.

Optimization under uncertainty (e.g. demand distributions).

A unique identifier used to track individual products in inventory, typically combining attributes such as brand, style, size, and color.

Inventory runs out and sales are lost or delayed.

Additional fees charged on top of base price.

Temporarily raising prices when demand is very high.

Portion of value between willingness to pay and cost captured by seller

The desired or goal price point set by a company to achieve margins or market positioning.

Government-imposed tax on imported or exported goods, designed to regulate trade, protect domestic industries, or generate revenue.

Relative forecast error compared to a naive benchmark.

Pricing where different levels or tiers are offered (e.g. Silver / Gold / Platinum)

Rebate rate that increases at higher purchase levels.

Concept that value (or utility) decreases over time (e.g. for perishable service).

Forecasting methods that use time‑ordered data.

Total Contract Value over the full term, including one‑time fees.

Money paid to retailers for promotions and distribution support.

Planned steps that move buyers to higher‑value offers.

Trials that become paid customers.

Periodic reconciliation of contracted vs. actual usage, billing the difference.

Fixed fee plus a variable usage fee.

Per‑unit profitability view (e.g., per customer or order).

Percentage of customers who upgrade or purchase add-ons

Charge in proportion to usage (e.g., per GB, per Application Programming Interface (API) call).

The process of extracting economic value from each stage of the value chain through pricing and margin management.

Structured plan to grow EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization) and value post‑deal.

Clear explanation of value that justifies price.

Set price based on the value delivered to the customer.

Survey asking four price questions to find an acceptable price range.

Price Sensitivity Meter collecting acceptable/too-cheap/too-expensive thresholds to define perceived value bands.

Total units sold in a period.

Change in performance caused by a shift in sales composition.

Bridge that explains revenue or margin change by volume, mix, and price.

Weighted Mean Absolute Percentage Error (MAPE) (110); errors weighted by volume.

The price below which a customer leaves (reservation price).

Measurement of each step from list to pocket price.

The automated process of extracting data and content from websites, transforming it into a structured format like a spreadsheet

Tool that lets you play out scenarios and see results.

The most a customer will pay; measured with surveys or experiments to find optimal price points.

Share of opportunities won out of total qualified opportunities.

The systematic process of analyzing why sales deals are won or lost to understand the specific reasons, especially regarding pricing, that influence buyers’ decisions

Method of maximizing revenue by controlling inventory and price over time.

Symmetric Mean Absolute Percentage Error (MAPE); balances over/under‑forecasting.