AI credits
AI credits are a prepaid unit of value a customer buys and spends on a product's AI features. Each action consumes credits, which abstract the underlying token or compute cost into one simple unit.
Glossary
Billing & Pricing Glossary
Clear, neutral definitions for the billing, pricing, and revenue terms that come up when you monetize an AI or SaaS product — with examples and how each concept works in practice.
Billing engine
A billing engine is the system that turns usage and subscription data into charges. It rates events, applies pricing and discounts, manages balances and invoices, and tells the payment processor what to collect.
Billing in arrears
Billing in arrears means charging a customer after they have used a product or service, at the end of the billing period. It is the opposite of billing in advance, where payment is collected upfront.
Billing models
A billing model is the structure a business uses to charge customers, such as flat subscription, usage-based, or hybrid. It defines what triggers a charge and how the amount is calculated.
Billing vs invoicing
Billing is the broad process of determining what a customer owes and collecting it. Invoicing is one step within billing: producing and sending the document that itemizes the amount due.
Cloud billing
Cloud billing is the metered, usage-based billing model used by cloud providers. It charges customers for the resources they consume, such as compute, storage, and bandwidth, measured continuously and billed per unit.
Enterprise billing
Enterprise billing is billing built for large organizations: high volumes, complex contracts, custom pricing, multiple entities and currencies, and strict revenue recognition and audit requirements.
Entitlements
Entitlements are the rules that define what a customer is allowed to access and how much they can use, based on the plan they bought. They turn a purchased plan into enforceable limits and feature access.
Invoice automation
Invoice automation is software that generates, sends, and tracks invoices without manual work. It pulls billing data, applies pricing and tax, issues the invoice, and reconciles payment automatically.
Multi-entity billing
Multi-entity billing is billing across several legal entities under one company, each with its own currency, tax rules, and accounting, while consolidating revenue for group-level reporting.
Overage charges
Overage charges are fees a customer pays for usage beyond what their plan includes. When consumption exceeds the plan's allowance, each additional unit is billed at an overage rate.
Proration
Proration is adjusting a charge to cover only the portion of a billing period a customer actually used. When a plan starts, changes, or ends mid-cycle, the bill is split proportionally to the time or quantity.
Real-time billing
Real-time billing rates and applies each usage event the moment it happens, and can check a customer's balance before the event runs. Charges settle continuously rather than at the end of a billing cycle.
Recurring billing
Recurring billing automatically charges a customer a set amount on a fixed schedule, such as monthly or yearly, for ongoing access to a product or service. It continues until the customer cancels.
SaaS billing
SaaS billing is the process of charging customers for software delivered as a subscription or usage-based service. It covers plans, metering, invoicing, payments, and revenue recognition for recurring software revenue.
Self-billing
Self-billing is an arrangement where the customer (buyer) generates the invoice on behalf of the supplier, rather than the supplier issuing it. It is common in marketplaces and high-volume supplier relationships.
Subscription management
Subscription management is the system that handles the full lifecycle of a recurring plan: signups, upgrades, downgrades, pauses, renewals, and cancellations, along with the billing changes each one triggers.
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