Overview
When a client buys a pass, they pay you upfront, but you have not delivered all the classes yet. This article explains how bsport splits that payment between revenue you have already earned and revenue you still owe in classes, so your reporting always reflects what you have actually delivered.
This concept applies to any credit-based pass or unlimited pass. It is the foundation of the Pass Usage insight, where you can track earned and deferred revenue in real time.
How It Works
The 2 parts of a pass
When a client buys a pass, the amount they pay splits into two parts:
Earned revenue: the part you have delivered (classes already taken)
Deferred revenue: the part you still owe (classes not yet taken)
At any moment, earned revenue plus deferred revenue equals what the client paid.
As the client uses their credits, deferred revenue goes down and earned revenue goes up. When a pass is brand new, everything is deferred. Once every credit is used, everything is earned.
Example
A client buys a 10-class pass for €100.
Event | Classes left | Deferred revenue | Earned revenue |
Pass bought | 10 | €100 | €0 |
After 1 class | 9 | €90 | €10 |
After 2 classes | 8 | €80 | €20 |
After 5 classes | 5 | €50 | €50 |
All 10 classes used | 0 | €0 | €100 |
Each class delivered moves €10 from deferred to earned. Once every credit is used, you have fully earned the €100.
Why It Matters
Deferred revenue tells you how much of your collected cash is already yours to keep versus how much is still a commitment to your clients:
A growing deferred revenue balance means you are selling passes faster than clients are using them: strong sales, but a building obligation.
A shrinking balance means clients are working through their credits faster than you are selling new passes.
It also shows how much future revenue is already secured in active passes, helping you anticipate the months ahead.
Because deferred revenue is money you still owe in classes, not spare cash, it is worth keeping a cash reserve roughly matched to your deferred revenue balance. That way, a wave of cancellations or refunds will not put you in a difficult cash position.
Important Behaviors
What happens when a pass expires? (Breakage)
Sometimes a client does not use all their credits before the pass expires. When that happens, the leftover deferred revenue becomes yours to keep. This is called breakage revenue.
Example: a client buys 10 classes for €100, attends only 6, then the pass expires.
The 6 classes taken = €60 earned during the pass life
The 4 unused classes = €40 recognized as breakage at expiry
Breakage is real revenue, but a lot of it can also be a sign that clients are not getting full value from their passes. It is worth watching to spot pricing, credit count, or validity issues.
Refunds
When you refund a client and remove the matching credits, your deferred revenue drops by the refunded amount. Anything already earned stays earned: a refund does not erase the classes the client already attended.
Example: client has €80 deferred after 2 classes, you refund €15.
Deferred revenue: €80 to €65 (down by the €15 refunded)
Earned revenue: stays at €20 (the 2 classes they took are still delivered)
Adjustments
Your staff can add or remove credits by hand. Each behaves differently:
Adding credits (for example, a goodwill gesture): deferred revenue does not change. No new money came in, you have simply spread the same value across more credits, so each credit is now worth a little less.
Removing credits: treated just like a class being taken, deferred revenue goes down proportionally.
Unlimited passes
Unlimited passes work differently: there are no credits to count. Instead, their revenue is earned gradually over the validity period, day by day.
Example: a 30-day unlimited pass billed €60 earns €2 per day (€60 divided by 30 days), no matter how many times the client comes in.
If an unlimited pass is never used during its validity, its value is tracked separately as Unused Unlimited Passes Revenue. It is shown alongside breakage for visibility, but it is not counted as breakage revenue.
In short: you earn revenue as you deliver, class by class for credit passes, day by day for unlimited passes. What you have not delivered yet stays deferred until it is either used, refunded, or expires (breakage).
Key Terms
Key Terms
Term | What it means |
Earned Revenue | The part of a pass you have already delivered (classes taken, or time elapsed for unlimited passes). |
Deferred Revenue | Money collected but not yet earned: the value of credits still waiting to be used on active passes. |
Breakage Revenue | Revenue you keep when credits expire unused at the end of a pass. |
Billed Amount | The total amount the client paid for the pass, taxes included. |
Used Credits | Credits consumed through bookings, appointments, on-demand purchases, or manual removals. |
Remaining Credits | Credits still available on a pass at a given moment. |