Pricing Glossary

Browse 35 pricing terms defined in plain English, from the cultural dictionary of computing.

35 Pricing Terms

AI Pricing
The pricing model used for AI products or APIs, such as per token, per request, per seat, per image, or usage-tiered billing. AI pricing shapes product design...
Annual Plan
A subscription plan billed yearly rather than monthly, often with discounting in exchange for longer commitment and better cash collection. Annual plans can...
Arbitrage
Profit generated by exploiting a difference in price, cost, or valuation between two markets or channels. In startups the term is used broadly for structural...
Blended Rate
An average rate that combines multiple pricing tiers, roles, or cost structures into one effective number. It is common in agencies, services businesses, and...
Bundling
Selling multiple products, features, or services together as a combined offering rather than individually. Bundling can raise deal size, simplify choices, or...
Feature Gating
Restricting access to certain features based on plan, permission level, rollout status, or account type. Startups use feature gating both for pricing strategy...
Fee Structure
The way charges are organized, such as flat fees, percentage fees, setup fees, or performance-based components. Fee structure often matters as much as headline...
Freemium
Freemium is a business model where a product is offered free of charge for basic functionality while premium features, advanced capabilities, or enhanced...
Free Tier
A no-cost product tier that lets users try or use a service within specific limits. In product culture free tiers are both acquisition tools and strategic...
Free Trial
A limited period during which prospective customers can use a product before paying, usually to reduce purchase friction and drive activation. Trial design...
Loss Leader
A product or offer priced at little or no profit, or even at a loss, to attract customers who will later buy more profitable offerings. The tactic works only...
Metered Billing
A billing model where customers are charged based on measured usage such as API calls, seats consumed, storage, or compute time rather than only through flat...
No-Brainer Deal
An offer framed as so obviously valuable or low-risk that the customer should feel foolish saying no. In practice, so-called no-brainer deals still fail if...
Outcome-Based Pricing
A pricing model where fees depend partly or fully on the results the customer achieves, such as savings delivered, revenue generated, or performance targets...
Pay-As-You-Go
A pricing model where customers pay based on actual usage or consumption rather than committing to a large fixed upfront contract. It lowers entry friction but...
Penetration Pricing
A pricing strategy that starts aggressively low to win market share quickly, often with the expectation that adoption, scale, or later expansion will justify...
Price Point
A specific price level at which a product is offered, often discussed in terms of customer psychology, competitiveness, and conversion behavior. Small changes...
Pricing Model
The overall structure of how a company charges customers, such as subscriptions, usage-based billing, per-seat pricing, or transaction fees. A strong pricing...
Pricing Strategy
The deliberate approach a company takes to setting and evolving prices based on value, market position, competition, and business goals. Pricing strategy is...
Pricing Tier
One level in a tiered pricing structure, usually defined by feature access, usage limits, support level, or customer segment. Tiers help companies separate...
Razor and Blade Model
A business model where the initial product is sold cheaply or at low margin to drive ongoing sales of complementary consumables, subscriptions, or repeat...
Revenue Model
The specific way a business converts value into revenue, such as subscriptions, transaction fees, licensing, ads, or services. A strong revenue model fits how...
Seat-Based Pricing
A pricing model where customers pay based on the number of users or seats with access to the product. It is simple to understand and forecast, though it may...
Series Seed
A priced seed financing rather than a SAFE or note, often used when the company wants a more formal institutional seed structure. The term signals an early but...
Stacking
Layering multiple incentives, products, channels, or revenue streams on top of one another to increase leverage or value capture. In startup conversation it...
Subscription Fatigue
The exhaustion or resistance users feel when too many products require ongoing subscriptions, making them less willing to add another recurring charge....
Subscription Model
A revenue model in which customers pay on a recurring basis for continued access to a product or service. Subscription models shift the business from one-time...
Surge Pricing
Dynamic pricing that increases prices temporarily when demand outstrips available supply. Marketplace and delivery companies use surge pricing to rebalance the...
Under-Monetized
Generating less revenue than the underlying usage, value delivered, or market willingness to pay would support. A product can be under-monetized because...
Usage-Based Pricing
A pricing model where charges scale with actual product consumption, such as API calls, compute time, transactions, or storage. Usage-based pricing aligns...
Value Engineering
The discipline of helping buyers quantify the economic value of a product so a purchase can be justified internally, especially in enterprise deals. Value...
Value Ladder
A structured sequence of offers or product levels designed to move customers from lower-commitment entry points to higher-value purchases over time. A value...
Volume Pricing
A pricing approach where the effective unit price changes based on the amount purchased or consumed, often decreasing at higher volumes. Volume pricing is...
Wrap Rate
A rate used in services businesses that wraps direct labor cost together with overhead and target margin to determine billable pricing. It helps translate...
Zone Pricing
A pricing system where prices vary by geographic region or predefined market zone rather than being fully uniform everywhere. Zone pricing is used when costs,...

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