Co-terming is aligning the end date of a new or added subscription with the end date of a customer's existing contract, so every subscription on the account renews together on one date.
A worked example
A customer signed a 12-month contract for 50 seats on 1 January. On 1 July they add 10 seats. Without co-terming, the 10 seats run to 30 June next year and the account now has two renewal dates. With co-terming, the 10 seats end on 31 December with the original 50, the first invoice for them covers six months instead of twelve, and the renewal Opportunity in December is for all 60 seats.
When not to co-term
Some businesses prefer independent terms for large add-ons late in a contract (a 9-month add-on co-termed to a contract with 6 weeks left is awkward). A common policy is to co-term when the remaining term is more than 90 days and otherwise start a new full term that becomes the new anchor date at renewal. Whatever the rule, write it down and configure it once — the mistake is deciding deal by deal.
In Salesforce
In Salesforce the contract end date lives on the Contract record and each subscription's term on its own record. Co-terming means the new subscription's end date is set to the Contract's end date rather than a full term from today, and its first invoice is prorated for the shorter period. Native Salesforce has no built-in co-terming logic; a CPQ or subscription management app supplies it.
How Kugamon handles it
Kugamon Subscription Management supports multi-active-contract handling and the choice, per account, of extending the existing Contract on renewal or creating a new one. When an Expansion order is released against an existing Contract, the new Subscription records inherit the Contract's end date and the invoice is prorated, so the account keeps a single renewal date and one renewal Opportunity.
Related terms
- Proration
- Renewal opportunity
- Contract
- Expansion order
- ARR
Source: www.kugamon.com