Do any SaaS companies use "Request Demo" or "Contact Sales" to offer different prices to different customers for the exact same product?
e.g. "If customer is a startup I sell ONE license at $50 but if it's enterprise I'll sell ONE at $5,000 just because I know they can afford it..."
Lots of people do this and there's nothing wrong with it, but I think it's best to have up front pricing rather than "contact for quote".<p>One way to do it is have the Enterprise version have a few more features that are unlikely to be of interest to small companies or individuals.<p>Another is just to say the company size on your pricing page. If your company has 500+ employees it's $5000, if 1 person it's $50, if 2-10, it's $200, if 11-499 it's $1000 - or whatever.<p>Can also have per user, say $100 per user, but a single location site wide license for $1000, or a global site license covering all branches for $20000.<p>Or whatever prices you like. Look around and you'll find tons of companies offering each kinds of licensing.
Yes, totally. This is common practice. A tip though. If you are attempting to connect directly with end users many folks are turned off by a "Contact Sales" <i>only</i> option. You should have something that is totally self serve, like try for $50/month for a single instance, but if you need more seats please "Contact Sales". This gets people in the door. Almost every large company that does any type of enterprise sales will use this model of "Contact Sales" and gets a steep discount off some list price posted publicly.
IANAL, but this is exactly how B2B sales works... you offer an absurdly high MSRP then offer discounts with various incentives based on completely arbitrary things, with the average purchase landing nowhere near MSRP.<p>I'd be careful about pricing this way to consumers since states are now started to see pricing differences as discrimination. See: <a href="http://nymag.com/intelligencer/2018/02/tinder-prices-discriminate-against-old-people-in-california.html" rel="nofollow">http://nymag.com/intelligencer/2018/02/tinder-prices-discrim...</a>
Most Enterprise vendors work that way but it always leaves a bad taste with me. When given the choice I will always go with a vendor who has clear and transparent pricing.<p>But realistically there is probably more money made in hiding prices and haggling a lot. Just be aware that the sales cycle will be much longer.
Joel Spolsky wrote a pretty in-depth article about pricing which also covers the "How Much Money Do You Have? Pricing." case which he feels is a bad strategy: <a href="https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-duckies/" rel="nofollow">https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-...</a>
Speaking as someone who does lot of vendor evals and purchases, I would see it as a structural red flag if I see prices go up as usage goes up (for a given set of features).<p>Different feature slabs (basic, advanced, enterprise etc) can be priced differently.<p>At any given feature slab, usual expectation is that after a certain scale, additional usage will be billed close to cost. The premium you extracted at lower end of the usage slab should cover your R&D costs, other overheads and your profits.
If you care to up-sell the higher feature slabs, then you can offer a time-limited discount or trial while making it amply clear that this is a one-time discount etc. to facilitate trial.<p>Having a cost+ model internally and looking at your customer mix and competition in the market will help you price each feature x usage slab appropriately.<p>Remember that customers expect prices to always go down over a period of time (due to lowered hardware costs, better automation, depreciated/amortised overheads etc). So, it is better to start high and go low than try to do the other way.
What about doing A/B testing with say $5 vs $7.5 for a product? The people who bought it for $7.5 will feel cheated when they find out it cost someone else $5. But at the time of purchase the product was seemingly worth $7.5 to the customer who paid for it. Isn't it fair to pay in relation to how much you value a product?
Absolutely. It's called price discrimination, and there's a whole treasure trove of literature about it. Usually it's not the <i>exact</i> same product, though, but rather something like "features that enterprise users need are extraordinarily expensive, everything else is relatively cheap". IIRC, single sign-on is an extremely common feature to use for this price discrimination.<p>Lots of non-SaaS companies use price discrimination as well. The biggest example is airlines, who will sell the same round-trip for different prices depending on whether or not the stay includes a Saturday night. Airlines assume that price-insensitive business travelers are generally unwilling to spend a Saturday away from home, and charge higher prices accordingly.
Most enterprises need a very different suite of features that take a lot of time and $ to build. I don't think it's as cheesy as other people in this thread try to make it sound. Often, you need to deal with a lot more regulation, have data hosted on prem (potentially in a different country), scale in a very different way (I.e. think of how Slack starts breaking at a certain threshold). Risk mitigation is really different too, often startups are way more understanding if your service goes down or has bugs.<p>Funny thing is when enterprise customers start asking for so many features, you have to tell them "Sure, we can build it, but it'll cost $50k instead of $50", and surprisingly they write you a check, so you start building those features.
The fact that you're asking this question indicates that you haven't yet figured out what your market will bear in terms of price. In ANY business the ideal price is one that customers will question but still pay. If they don't question, the price is too low. Keeping your pricing dark is the best way to figure out your numbers at this stage. This is a long winded explanation but the answer to your question is YES! You can set your price at whatever you think the customer will bear. Be confident. If you've got a great product, don't feel bad asking a lot of money for it.
They sure do but that's why businesses that hide their pricing behind "Contact sales for a quote" are always the last option to get considered; it's like a giant sign saying "<i>We're going to gouge you as much as we can get away with!</i>".<p>And, of course, if the customer finds out that other customers are getting better pricing, expect them to raise hell until they get the same price or better.
In my experience, the 'Request Demo/Quote' or 'Contact Sales' is a bit more nuanced than just price differentiation. Especially when the product is offered by a young and/or small to mid-sized business.<p>First of all, building a company which can effectively sell to (and support) businesses as well as end customers is far from easy. Unless a company has a proven track record, I'd meet such claims with much skepticism.<p>Enterprise customer's expectations/requirements from a support, integration, availability, etc. perspective are completely different than those from an end-user. When going through those requirements, it comes down to finding the price at which those requirements can or are willing to be met. For example, an enterprise customer is likely to add clauses into the contract which deal with ownership changes, bankruptcy, option to transfer to a perpetual license (possibly with source code) in case of end-of-support, availability of consultancy services for integration to future tools, etc.
Yes. It's known as 'value based' pricing.<p>When you see a 'contact sales' form it usually means professional sales people. Their job is trying to determine how much you are willing to pay based on how much you'll benefit from the product. But the pricing will not be $50 or $5000. Generally businesses aren't going to send professional sales people chasing a sub $10k deal.<p>Many SaaS companies don't want to create/maintain a huge professional sales apparatus, and/or they want to focus on getting a toe into places at $10/month/user and gradually growing through the entire company. So instead they try to slice the up the market based on per user costs, or making the specific features that businesses need really expensive. Building a pricing model that scales up quick.
I would actually suggest a learning period for pricing. Basically youre going to iterate through several pricing models and youre not going to get it right your first try, so embrace that and figure out the best set of prices “for now”.<p>- make sure your unit economics work; you dont lose money on a sale unless its part of some intentional strategy (you need a pile of cash)<p>- find some artificial scarcity features and at least separate your potential customers using one of these.<p>- instrument your systems (sales and revenue) so you can get good stats on LTV, LTV:CAC, ARPA, etc.<p>- after 6 months (or whenever you feel is appropriate) revisit pricing and revise your strategy.
Note that this is a valid and even necessary strategy if onboarding or hosting or support costs are high and variable (for instance, onboarding requires custom integration with the customer’s systems, performed by the vendor; or if you may have to spin up a variable number of servers to support their usage level; or for enterprise customers who may want to negotiate certain SLAs in terms of how quickly they can reach customer support via what avenues; etc).<p>Like many here, as a potential customer, I find this practice frustrating, tho.
Yes. This is very common practice for enterprise software: price on value, not on cost, which means adjusting the price based on the user and their particular needs and pains.
Maybe it's not the thing you are looking for, after I read your question carefully, but just wanted to mention that I do the same for customers depending on their country with Purchasing Power Parity to adjust prices. [0]<p>[0] <a href="https://github.com/rwieruch/purchasing-power-parity" rel="nofollow">https://github.com/rwieruch/purchasing-power-parity</a>
Every time I think about a price discrimination scenario either in SaaS, airline tickets, or booking a hotel, I see it in government taxation on individuals or corporations as well. If you make more, you have to pay more. Of course, the ones who pay more have some extra perks that come with the price.
Tim Harford's Undercover Economist has examples of how to get people to self select:<p><a href="https://www.goodreads.com/book/show/70420.The_Undercover_Economist" rel="nofollow">https://www.goodreads.com/book/show/70420.The_Undercover_Eco...</a>
It's best to have tiered pricing - add a few things as extra to the higher layer so there is additional value for the extra price.<p>Without that, I am not sure how this is sustainable unless you are in the "disposable services" business.
Yep, very common. Even companies with upfront pricing (like AWS) will give custom discounts to enterprise users.<p>And for Startups, it's not uncommon to give discounts because sometimes you just want the logo.
I recommend this book: The Strategy and Tactics of Pricing by Thomas T. Nagle Georg Müller<p>Not a short or simple read, but wonderfully covers working through all of the mechanics of creating pricing structures.
No this is a bad idea. Price should align with the value customers get from the product. It needs to be defensible for many reasons but one of them is that your customers talk to each other.
different prices to different users are foundational to the wedding industry and airlines/hotel, just off the top of my head. When I worked in travel a long time ago, there was a saying that if any 2 people paid the same price, somebody did their job wrong (paraphrasing - it was a <i>very</i> long time ago)<p>In both of those cases however it's very easy for the vendor to cover their tracks. I imagine it would behoove you to do the same if you're taking a similar tack.
Yep, plenty of companies take a bunch of inputs (your budget, expected usage, potential revenue, how hard you negotiate..) and come up with a number based on that.
In my experience most companies that hide their prices behind "request a quote" start out way higher and pretty much expect you to negotiate down.
To answer your question as is, no - it would be dumb to have different prices for different users for the 'same' product. If you are certain that the value you provide is X dollars, then charge X dollars only - even if they are a 2 member team or a 1000 member team.<p>On the other hand - if you decide to move away from the license model, you can charge according to seats, etc.
Publisher paywalls are also starting to experiment with this -- the price will raise or lower based on the user's income or propensity to subscribe.