What is the BEST description of an external customer?

A person in the same organization but a different business unit is classified as an internal customer, because they still belong to the same overarching organization as the service provider.

Being charged for services does not define an external customer, since internal customers in many organizations are also billed via chargeback or cost-recovery mechanisms.

In ITIL, the internal versus external customer distinction is based purely on organizational membership, not billing or cost considerations. External customers belong to a separate organization from the service provider, and their service relationships are typically governed by formal contracts and SLAs with legal standing. This organizational separation is the definitive criterion.

Cost being the primary driver describes a specific commercial dynamic in a customer relationship, not the criterion that distinguishes an external customer from an internal one.