---
title: "Subscription Glossary — Subscribe &amp; Conquer"
description: "The complete subscription business glossary — MRR, ARR, NRR, GRR, CAC, LTV, churn, dunning, and 20+ more terms defined in plain English by Ross Williams."
lang: en
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---

[Subscribe &  Conquer](/)

[Home](/)

[The Book](/inside-the-book)

[The Book — Overview](/inside-the-book)

[01 The Subscription Mindset Shift ](/ch-1)[02 Pricing & Packaging ](/ch-2)[03 Retention & Churn ](/ch-3)[04 Acquisition & Conversion ](/ch-4)[05 Upsells & Expansion Revenue ](/ch-5)[06 Payment Optimisation ](/ch-6)

[07 The Subscription Squad ](/ch-7)[08 Mobile App Subscriptions ](/ch-8)[09 SaaS & B2B Subscriptions ](/ch-9)[10 Physical & Hybrid Subscriptions ](/ch-10)[11 Data, Metrics & Experimentation ](/ch-11)[12 Scaling the Engine ](/ch-12)

[The Guide](/guide/subscription-businesses)

[The Guide — Overview](/guide/subscription-businesses)

[Guide to Subscription Businesses Start Here ](/guide/subscription-businesses)[Subscription Business Models Explained ](/guide/subscription-business-models)[Why Subscriptions Benefit Consumers ](/guide/subscriptions-for-consumers)[Subscription Economy Statistics (2026) ](/guide/subscription-economy-statistics)[What Is Churn? Complete Guide (2026) ](/guide/subscription-churn)[Start a Subscription Business (2026) ](/guide/start-subscription-business)[Subscription Pricing Strategy Guide ](/guide/subscription-pricing)[Subscription Retention Strategies ](/guide/subscription-retention-strategies)[Subscription Metrics That Matter ](/guide/subscription-metrics)[Failed Payments & Involuntary Churn ](/guide/failed-payments-involuntary-churn)[Mobile App Subscription Pricing ](/guide/mobile-app-subscriptions)[SaaS Subscription Model (2026) ](/guide/saas-subscription-model)[Expansion Revenue Guide (2026) ](/guide/subscription-expansion-revenue)[Annual vs Monthly Subscriptions Comparison ](/guide/annual-vs-monthly-subscriptions)[Freemium vs Free Trial Comparison ](/guide/freemium-vs-free-trial)[SaaS vs Consumer Subscriptions Comparison ](/guide/saas-vs-consumer-subscriptions)

[Free Chapter](/free-chapter)[About Ross](/about)

[Get Early Access](/free-chapter)

Reference · Updated May 2026

# The Subscription Business Glossary

Every metric, lever, and piece of jargon in the Subscribe & Conquer book — defined in one sentence, then explained in two more. Bookmark it, link your team to it, or copy a definition straight into your board deck.

22 terms · written by [Ross Williams](/about), who bootstrapped a subscription business to $50M in recurring revenue.

Jump to

-   [A](#letter-A)
-   [C](#letter-C)
-   [D](#letter-D)
-   [E](#letter-E)
-   [F](#letter-F)
-   [G](#letter-G)
-   [I](#letter-I)
-   [L](#letter-L)
-   [M](#letter-M)
-   [N](#letter-N)
-   [P](#letter-P)
-   [T](#letter-T)
-   [V](#letter-V)

## A

[ARPU (Average Revenue Per User)](#arpu)

**ARPU is the average revenue a subscription business earns per active subscriber in a given period.**

Calculated as total revenue ÷ active subscribers. Tracked monthly or annually, ARPU rises through pricing increases, plan upgrades, or add-on attach — and falls when discounts or downgrades dominate.

[Read more → Subscription metrics](/guide/subscription-metrics)

[ARR (Annual Recurring Revenue)](#arr)

**ARR is the value of recurring subscription revenue normalised to a one-year run rate.**

Calculated as MRR × 12 (or sum of annual contract values for SaaS). ARR is the headline number investors and acquirers anchor on; growth efficiency is judged as new ARR added per dollar of sales-and-marketing spend.

[Read more → Subscription metrics](/guide/subscription-metrics)

## C

[CAC (Customer Acquisition Cost)](#cac)

**CAC is the fully-loaded cost to acquire one paying customer, including paid media, sales salaries, and tooling.**

Healthy SaaS businesses target an LTV:CAC ratio of 3:1 or higher and a CAC payback period under 12 months. Consumer subscription businesses often target sub-3-month payback because churn is faster.

[Read more → Subscription metrics](/guide/subscription-metrics)

[CAC Payback Period](#cac-payback)

**The number of months of gross profit it takes to recover the cost of acquiring a customer.**

Calculated as CAC ÷ (ARPU × gross margin). Shorter payback means faster compounding and less working capital tied up — bootstrapped subscription businesses live or die by this metric.

[Read more → Subscription metrics](/guide/subscription-metrics)

[Card Updater (Account Updater)](#card-updater)

**A card-network service (Visa VAU, Mastercard ABU, Amex CardRefresher) that automatically updates expired or reissued card details on file.**

Enabling account updaters is the single highest-leverage involuntary-churn fix — typically recovering 30-50% of payments that would otherwise fail at renewal. Most modern processors expose it as a one-click toggle.

[Read more → Failed payments & involuntary churn](/guide/failed-payments-involuntary-churn)

[Churn](#churn)

**Churn is the rate at which subscribers cancel, fail to renew, or stop paying within a given period.**

Reported monthly or annually. Subdivided into voluntary churn (active cancellation) and involuntary churn (failed payment), and into logo churn (customer count) and revenue churn (dollar value).

[Read more → Subscription churn](/guide/subscription-churn)

[Cohort Analysis](#cohort)

**Grouping subscribers by their signup month (or campaign) and tracking their retention and revenue over time.**

Cohort curves expose whether retention is genuinely improving or whether headline churn is being masked by a flood of new signups. Read the slope of month-3 to month-12 retention to judge product-market fit.

[Read more → Subscription metrics](/guide/subscription-metrics)

[Contraction MRR](#contraction)

**The MRR lost from existing subscribers downgrading plans, removing seats, or dropping add-ons (without fully cancelling).**

Contraction sits between expansion and churn in the MRR movement equation. High contraction signals the wrong customers are on the wrong tiers — usually a packaging problem, not a product one.

[Read more → Subscription pricing](/guide/subscription-pricing)

## D

[Dunning](#dunning)

**The structured retry-and-communication process for recovering failed subscription payments before the subscriber is cancelled.**

A typical dunning sequence retries the card on intelligent timing (3, 5, 7, 14 days) and emails the customer in parallel. Best-in-class dunning recovers 60-70% of failed payments; default Stripe Smart Retries alone recovers ~40%.

[Read more → Failed payments & involuntary churn](/guide/failed-payments-involuntary-churn)

## E

[Expansion Revenue](#expansion)

**Additional MRR generated from existing subscribers via upgrades, seat additions, usage overages, or cross-sell.**

When expansion exceeds churn + contraction, NRR is above 100% and the business compounds without acquiring a single new customer. The fastest-growing SaaS companies report NRR of 120-130%.

[Read more → Expansion revenue](/guide/subscription-expansion-revenue)

## F

[Freemium](#freemium)

**A pricing model that offers a perpetually free product tier, monetised by upgrading a minority of users to paid plans.**

Freemium works when marginal serving cost is near zero, the free product is genuinely useful, and natural upgrade triggers (limits, collaboration, advanced features) are baked in. Typical free-to-paid conversion is 2-5%.

[Read more → Subscription business models](/guide/subscription-business-models)

[Free Trial](#free-trial)

**A time-bound period (typically 7, 14, or 30 days) of full product access designed to convert prospects to paid subscribers.**

Opt-in trials (no card required) drive top-of-funnel volume; opt-out trials (card required) drive higher conversion but lower volume. Most consumer subscription businesses see 40-60% trial-to-paid conversion on opt-out trials.

[Read more → Subscription business models](/guide/subscription-business-models)

## G

[GRR (Gross Revenue Retention)](#grr)

**GRR is the percentage of recurring revenue retained from a cohort, excluding any expansion — capped at 100%.**

GRR isolates the leak. World-class SaaS targets 90%+ GRR; consumer subscriptions typically run 60-80%. Pair with NRR to see whether expansion is masking a retention problem.

[Read more → Subscription retention strategies](/guide/subscription-retention-strategies)

## I

[Involuntary Churn](#involuntary-churn)

**Subscriber loss caused by failed payments — expired cards, insufficient funds, or fraud blocks — rather than active cancellation.**

Involuntary churn typically accounts for 20-40% of all subscription cancellations and is the most recoverable form. Account updaters, intelligent retries, and pre-expiry email flows together claw back the majority.

[Read more → Failed payments & involuntary churn](/guide/failed-payments-involuntary-churn)

## L

[Logo Retention](#logo-retention)

**The percentage of customer accounts (logos) retained over a period, ignoring revenue per account.**

Use logo retention to judge product fit; use revenue retention (GRR/NRR) to judge commercial fit. Sharp divergence — high logo retention but low GRR — usually means downgrades are eating contract value.

[Read more → Subscription retention strategies](/guide/subscription-retention-strategies)

[LTV (Lifetime Value)](#ltv)

**LTV is the total gross profit a subscription business expects to earn from an average customer over the lifetime of the relationship.**

Simple form: LTV = ARPU × gross margin ÷ churn rate. Use LTV against CAC to size acquisition channels — anything below 3:1 LTV:CAC is hard to scale profitably.

[Read more → Subscription metrics](/guide/subscription-metrics)

## M

[MRR (Monthly Recurring Revenue)](#mrr)

**MRR is the predictable subscription revenue normalised to a one-month value, regardless of billing cadence.**

Annual contracts are divided by 12 to express in MRR. The MRR movement equation — New + Expansion − Contraction − Churn = Net New MRR — is the operating heartbeat of every subscription business.

[Read more → Subscription metrics](/guide/subscription-metrics)

## N

[NDR (Net Dollar Retention)](#ndr)

**NDR is another name for NRR — the percentage of recurring revenue retained from a cohort, including expansion, net of churn and contraction.**

Used interchangeably with NRR in SaaS reporting. Public SaaS benchmarks: best-in-class >130%, healthy 110-120%, concerning <100%.

[Read more → Subscription metrics](/guide/subscription-metrics)

[NRR (Net Revenue Retention)](#nrr)

**NRR is the percentage of recurring revenue retained from a cohort over a period, including expansion and net of churn and contraction.**

Calculated as (starting MRR + expansion − contraction − churn) ÷ starting MRR. NRR above 100% means the business grows from existing customers alone — the holy grail of subscription economics.

[Read more → Expansion revenue](/guide/subscription-expansion-revenue)

## P

[Paywall](#paywall)

**A gating mechanism that requires payment (or signup) before content, features, or usage continues.**

Hard paywalls maximise revenue per visitor; metered paywalls (e.g. 5 free articles a month) maximise reach. Mobile-app paywall design — copy, pricing layout, social proof — is now the single biggest driver of consumer subscription conversion.

[Read more → Mobile app subscriptions](/guide/mobile-app-subscriptions)

## T

[Trial Conversion Rate](#trial-conversion)

**The percentage of free-trial signups who become paying subscribers at the end of the trial.**

Opt-out trials (card on file) typically convert 40-60%; opt-in trials convert 10-25%. Onboarding quality, time-to-first-value, and a clear upgrade prompt at trial expiry are the three biggest levers.

[Read more → Subscription business models](/guide/subscription-business-models)

## V

[Voluntary Churn](#voluntary-churn)

**Subscriber loss caused by an active cancellation decision — distinct from involuntary churn caused by failed payments.**

Reduce voluntary churn through better onboarding, in-product engagement, save flows in the cancellation journey, and pause-instead-of-cancel offers. A well-designed save flow recovers 15-25% of attempted cancellations.

[Read more → Subscription retention strategies](/guide/subscription-retention-strategies)

The full playbook

## Every term here is a chapter in the book.

Subscribe & Conquer turns these definitions into 12 chapters of operating detail — pricing experiments, retention saves, dunning sequences, expansion plays — drawn from 21 years bootstrapping a subscription business to $50M.

[Read the free chapter →](/free-chapter)

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Free chapter + 90-day action plan included

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#### Continue Reading

-   [Subscription Churn](/guide/subscription-churn)
-   [Pricing Strategy](/guide/subscription-pricing)
-   [Retention Strategies](/guide/subscription-retention-strategies)
-   [Subscription Metrics](/guide/subscription-metrics)

#### The Book

-   [Inside the Book](/inside-the-book)
-   [Free Chapter](/free-chapter)
-   [Ch 01: The Subscription Mindset Shift](/ch-1)
-   [Ch 02: Pricing & Packaging](/ch-2)
-   [Ch 03: Retention & Churn](/ch-3)
-   [Ch 04: Acquisition & Conversion](/ch-4)
-   [Ch 05: Upsells & Expansion Revenue](/ch-5)
-   [Ch 06: Payment Optimisation](/ch-6)

#### Chapters 7–12

-   [Ch 07: The Subscription Squad](/ch-7)
-   [Ch 08: Mobile App Subscriptions](/ch-8)
-   [Ch 09: SaaS & B2B Subscriptions](/ch-9)
-   [Ch 10: Physical & Hybrid Subscriptions](/ch-10)
-   [Ch 11: Data, Metrics & Experimentation](/ch-11)
-   [Ch 12: Scaling the Engine](/ch-12)

#### The Guide

-   [Guide to Subscription Businesses](/guide/subscription-businesses)
-   [Subscription Business Models Explained](/guide/subscription-business-models)
-   [Why Subscriptions Benefit Consumers](/guide/subscriptions-for-consumers)
-   [Subscription Economy Statistics (2026)](/guide/subscription-economy-statistics)
-   [What Is Churn? Complete Guide (2026)](/guide/subscription-churn)
-   [Start a Subscription Business (2026)](/guide/start-subscription-business)
-   [Subscription Pricing Strategy Guide](/guide/subscription-pricing)
-   [Subscription Retention Strategies](/guide/subscription-retention-strategies)
-   [Subscription Metrics That Matter](/guide/subscription-metrics)
-   [Failed Payments & Involuntary Churn](/guide/failed-payments-involuntary-churn)
-   [Mobile App Subscription Pricing](/guide/mobile-app-subscriptions)
-   [SaaS Subscription Model (2026)](/guide/saas-subscription-model)
-   [Expansion Revenue Guide (2026)](/guide/subscription-expansion-revenue)
-   [Annual vs Monthly Subscriptions](/guide/annual-vs-monthly-subscriptions)
-   [Freemium vs Free Trial](/guide/freemium-vs-free-trial)
-   [SaaS vs Consumer Subscriptions](/guide/saas-vs-consumer-subscriptions)
-   [View all guides →](/guide/subscription-businesses)
-   [Glossary →](/glossary)
-   [Benchmarks →](/benchmarks)

#### About

-   [About Ross Williams](/about)
-   [LinkedIn](https://www.linkedin.com/in/rosswilliamsuk)
-   [The Reformed Entrepreneur](https://reformedentrepreneur.com)
-   [rosswilliams.com](https://www.rosswilliams.com)

Subscribe & Conquer © 2026 · By Ross Williams 

[The Guide](/guide/subscription-businesses)[About](/about)[Free Chapter](/free-chapter)