Enterprise pricing. Most founders don't have a game plan beyond throwing up a "Contact Sales" button on the site. When I started my co at 23 y/o, I remember making all the pricing mistakes in the playbook.
10+ years later and having now worked w hundreds of founders as an investor, here’s a few bits of pricing advice I wish id known sooner:
10+ years later and having now worked w hundreds of founders as an investor, here’s a few bits of pricing advice I wish id known sooner:
1- In the early days, try to stick to a pricing model/framework that resembles how your customers are used to buying software. For example, my customers (at WayUp) were most used to paying LinkedIn per seat for a flat fee per year.
2- Do pricing discovery before you give a quote. It’s normal to ask customers about their budget. And if the customer isn’t willing to answer some questions, dont be afraid to give a price that matches what you think they should pay. Most Ent customers try to negotiate, anyway.
2b- And on that note… I don’t always agree with the common advice to just keep raising your prices until you hear from prospects that it’s too high. In my experience that misses a key nuance: Enterprise pricing isn’t one-size-fits-all. Two enterprise companies of the same size can have different budgets and different spending philosophies (think Lockheed Martin vs. famously frugal Amazon).
3- What I found was more effective was to let the customer figure out their own pricing so that you don’t have to negotiate. For example, I’d give a spreadsheet with a pricing calculator where prospects could manipulate certain cells based on what they wanted to buy, so they could see how the price would change based on the # of seats or modules they want, the discounts they’d get for longer contracts, and so on. This way, I never felt like I was negotiating against a customer – instead, they were negotiating with themselves.
4- For flat fee subscription contracts, if your goal is to sign multi-year contracts, give the client 3 options, where they get a higher discount for a longer duration.
5- Is a client insisting on a free trial? Try signing them for a 12 mo contract where they can terminate for any reason within the first 2 months, & where they don’t have to pay until day 61. Removes the risk they’re trying to avoid (that they try it and hate it)
6- last one for today… I strongly advise companies against raising the price dramatically at renewal. Too many startups start low, only to 8X the price one year later, which turns customers off and loses their trust. Few things worse than losing a customer’s trust!!
• • •
Missing some Tweet in this thread? You can try to
force a refresh
