Contract shape
Contract shape is the structural form an agreement takes, term length, commitment level, billing frequency, ramp, and the conditions under which any of them change.
Two contracts of identical annual value can have entirely different shapes: one prepaid annual with a three-year term and an uplift clause, another monthly in arrears cancellable on thirty days. They produce the same ARR and completely different cash, risk and renewal profiles.
Shape is where commercial concessions accumulate invisibly. Payment terms, ramp schedules, opt-outs and co-termination each get negotiated per deal, and each modifies the company’s working capital and revenue predictability. Treating shape as a designed set of permitted forms, rather than an open negotiation, is what keeps the portfolio legible.
Where it breaks
Every contract is bespoke, so no two renewals work the same way and cash forecasting is done by reading PDFs.
Related terms
- Offer structure
- Offer structure is the decomposition of what a company sells into priceable, deliverable, and governable components.
- Cash conversion cycle
- The cash conversion cycle measures the time between spending to acquire and deliver, and collecting the cash that results.
- Deal desk
- A deal desk is the control point where non-standard commercial terms are reviewed, approved and recorded before they become contractual obligations.
- Renewal management
- Renewal management is the governed process by which a contract term ends and a new one begins, with the renewal treated as a forecastable pipeline event.
Field notes on this
- Your pricing is a list, not a logic
A price list says what things cost today. It cannot say what to charge the deal in front of you, which is why realised price drifts and nobody owns the drift.