B2B tech pricing glossary: 60 terms explained

This glossary explains the pricing words B2B tech pricing teams use, in plain language. Each of the 60 terms has a one-line definition and a short example from a B2B tech company.

A · B · C · D · E · F · G · H · L · M · N · O · P · R · S · T · U · V · W

Terms marked (Mondrio usage) show how we use the word in our own platform.

A

Add-on An extra feature or service sold on top of a package. Example: An advanced reporting module that customers on any tier can buy for an extra monthly fee.

Agent-based pricing Charging per AI agent deployed, priced like a digital worker instead of a software seat. Example: A sales AI vendor charges a fixed monthly fee for each SDR agent a customer switches on.

Annual escalator A contract clause that raises the price by a set percentage or index each contract year. Example: A three-year deal where the subscription goes up by an agreed percentage at the start of years two and three.

ARPA Average revenue per account: total recurring revenue divided by the number of paying accounts. Example: Tracking ARPA by segment shows whether mid-market accounts grow after a packaging change.

ARR Annual recurring revenue: the subscription revenue a company would book over a year at today's contracts. Example: A customer paying $2,000 a month adds $24,000 to ARR.

B

Bundling Selling several products or modules together for one price. Example: A security platform sells its scanning, monitoring and reporting tools as one suite.

C

Churn Revenue or customers lost in a period through cancellations and downgrades. Example: Tracking the share of churn caused by price separates "too expensive" from "not used enough".

Competitive positioning Where a price sits against the alternatives a buyer compares, including doing nothing or hiring people. Example: A pricing tool frames its fee against the cost of a consultant project or a full-time pricing hire.

Conditional discount A discount given only when the buyer meets a condition. Example: Extra discount in return for a multi-year term, upfront payment or a public case study.

CPQ (configure, price, quote) Software and rules that build a correct quote from products, prices and discounts. Example: A rep picks a tier and add-ons, and the CPQ tool applies the right list prices and approval rules.

Credits (prepaid) Customers buy a balance of credits upfront and usage draws it down. Example: An AI platform sells credit packs; each generated report or model call uses a set number of credits.

D

Deal desk The team or workflow that reviews non-standard deals and approves discounts and special terms. Example: Any discount above the guardrail goes to the deal desk before the quote is sent.

Discount guardrails Limits per segment on how far sales can discount without extra approval. Example: Reps can give up to an agreed floor on Enterprise deals; anything deeper needs VP approval.

Discount variance How much discounts differ between similar deals. Example: Two customers of the same size and tier got very different discounts, which signals weak governance.

E

Entitlement What a customer is allowed to use under their plan: features, limits and service levels. Example: The Growth plan includes 5 workspaces and email support; Enterprise adds SSO and a named manager.

Expansion revenue Extra revenue from existing customers through upsell, cross-sell or more usage. Example: A customer adds two business units and moves up a tier at renewal.

F

Feature fencing Deciding which features sit in which tier, so each tier has a clear reason to upgrade. Example: Audit logs and SSO are fenced into the Enterprise tier.

Flat-rate pricing One price for one product, regardless of users or usage. Example: A tool charges every customer the same monthly fee for full access.

Freemium A free plan with no time limit, with paid plans for more features or usage. Example: A developer tool is free for individuals and paid for teams.

Free trial Full or partial access for a limited time before the customer has to pay. Example: A 14-day trial of the paid tier with the customer's own data.

G

Good-better-best A line-up of three tiers at rising prices, each with more value. Example: Starter, Growth and Enterprise plans on a pricing page.

Grandfathering Letting existing customers keep their old price or plan for a period after a price change. Example: Current customers keep their price until their next renewal; new customers pay the new list price.

Gross margin Revenue minus the direct cost of delivering the product, as a share of revenue. Example: For AI products, model and compute costs per request can pull gross margin down as usage grows.

H

Hybrid pricing A mix of a fixed fee and a usage-based charge. Example: A platform fee per year plus a charge per 1,000 API calls above the included amount.

L

Land and expand Start with a small first deal, then grow inside the account. Example: Win one team at a modest price, then roll out to other departments.

List price The standard published or internal price before any discount. Example: The price on the rate card that every quote starts from.

M

Median discount The middle discount across a set of deals, less skewed by one-off outliers than the average. Example: Reviewing median discount per segment each quarter shows whether guardrails hold.

Migration Moving existing customers from old pricing or packaging to new. Example: Customers move in waves, with caps on how much any bill can rise in year one.

Minimum commitment A customer agrees to pay at least a set amount over the term, whatever their usage. Example: A usage-priced data tool asks for a minimum annual spend in return for a lower unit price.

Monetization strategy The overall plan for how a product turns the value it creates into revenue. Example: Deciding to charge per outcome for the AI module while keeping core features per seat.

MRR Monthly recurring revenue: subscription revenue per month at current contracts. Example: MRR moves when a customer upgrades, downgrades or cancels.

N

Net dollar retention (NDR) Revenue today from customers you had a year ago, including expansion, downgrades and churn, divided by their revenue then. Example: Above 100% means the existing base grew even without new customers.

O

Outcome-based pricing Charging for a result delivered instead of access or usage. Example: An AI support agent charges per conversation it resolves without a human.

Overage The charge for usage above what the plan includes. Example: A plan includes 10,000 API calls a month; each extra block of calls is billed separately.

P

Packaging How features, limits and services are grouped into offers such as tiers, bundles and add-ons. Example: Moving analytics from an add-on into the middle tier to make that tier the obvious choice.

Per-seat pricing Charging per named user. It fits well when value grows with the number of people who use the product. Example: A collaboration tool charges per editor, while viewers are free.

Pocket price What the company actually keeps after all discounts, free months, rebates and other concessions. Example: A $100,000 list deal with a discount and three free months leaves a much lower pocket price.

Price anchoring Showing a reference price first so the price that follows feels reasonable. Example: Showing the Enterprise tier first on the pricing page makes the Growth tier look moderate.

Price elasticity How much demand changes when the price changes. Example: If a price rise barely changes win rates in one segment, demand there is not very price sensitive.

Price fence A rule that keeps each customer group in its intended price, such as eligibility proof or a usage limit. Example: A startup discount only for companies under a revenue threshold, checked at signup.

Price increase playbook A set plan for raising prices for existing customers: who, when, how much, notice period and messaging. Example: Customers get 90 days' notice and a clear reason, and at-risk accounts get a personal call.

Price level The actual amount charged for each package or unit. Example: Setting the Growth tier at a given monthly price after testing value against willingness to pay.

Price metric (value metric) The unit you charge for, ideally one that grows with the value the customer gets. Example: Users, invoices processed, API calls, or contacts in the database.

Price waterfall The step-by-step view from list price down to pocket price, showing each discount and concession. Example: The waterfall shows most margin is lost to free implementation, not to the headline discount.

Pricing governance The rules on who can set and change prices and who approves exceptions. Example: Product sets list prices, finance owns the guardrails, and the deal desk approves exceptions.

Pricing model The structure of how a customer is charged: flat, per seat, usage, tiered, hybrid or outcome-based. Example: Moving from per seat to a hybrid of platform fee plus usage.

Proration Adjusting a charge for part of a billing period when a plan changes mid-term. Example: A customer upgrades halfway through the year and pays the difference for the remaining months only.

R

Ramp deal A contract where the price steps up over the term as the customer rolls out. Example: Year one at a lower fee while two teams onboard, full price from year two.

Realized price (Mondrio usage) The price a customer actually agrees to after negotiation with sales. Example: The target was $8,000 a month; the customer signed at $7,500, the realized price.

Renewal uplift An increase applied when a contract renews, sometimes tied to an inflation index. Example: Renewals include an uplift linked to the consumer price index unless the deal desk waives it.

S

Segmentation Grouping customers by needs, size or willingness to pay, so each group gets a fitting offer. Example: Separate packages for mid-market and enterprise, with different metrics and support.

T

Target price (Mondrio usage) The intended price for each existing customer in a new pricing model, after migration rules such as caps and grandfathering. Example: A loyal mid-market customer gets a target price below list because of a cap on increases.

Theoretical price (Mondrio usage) The list price for a package in the new model, which can differ by segment or region. Example: The Enterprise tier is set at one price for mid-market and a lower price for smaller companies.

Tiered pricing The unit price changes as volume passes set thresholds. Example: The first 1,000 transactions cost one rate and every transaction after that a lower rate.

Token-based pricing Charging for AI usage per token, the small chunks of text a model reads and writes. Example: An AI writing feature passes model costs through as a price per million tokens.

U

Usage-based pricing Customers pay for what they use instead of a fixed fee. Example: A data platform bills per gigabyte processed each month.

V

Value-based pricing Setting the price from the value the customer gets, not from cost or competitor prices. Example: A revenue tool is priced against the extra margin it helps customers capture.

Van Westendorp price sensitivity meter A questionnaire method with four questions on when a price feels too cheap, cheap, expensive and too expensive. Example: Running it with current customers before setting the price of a new AI module.

W

Willingness to pay (WTP) The highest price a buyer would accept for a given offer. Example: Interviews and questionnaires show finance teams accept a higher price when the tool connects to their ERP.

Win rate The share of qualified deals that are won. Tracking the share lost on price shows whether price is the reason for losses. Example: Win rate drops after a price change, but losses on price stay flat, so the cause is elsewhere.

Related guides

• AI pricing strategy: how to monetize AI?
• B2B pricing strategy: how to develop your optimal pricing strategy?

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Last updated: 14 October 2026.