Is it popular for SaaS to offer price lock guarantee?


This post is by Jason Lemkin from SaaStr


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It is popular in enterprise sales, especially as a “trick” to get a customer to sign a multi-year deal. Why would a customer sign a multi-year deal (especially one with cash up-front)? Two reasons:
  • An additional discount. I.e., another 10% off for a 3 year deal, cash up-front. This will sound great in the early years, when cash is king. Later, perhaps less so, as it’s yet another discount you didn’t have to give.
  • Price protection. This is a big deal in the enterprise, where things are budgeted. The last thing I want as an enterprise buyer is to get to start using a new app, budget say $400k a year for it for years to come … and have the vendor raise the price to $600k. That wrecks my budget (and some trust). So in many cases, an enterprise buyer is somewhat happy to do a 3+ deal IF they are 99%+ sure they’ll use you for 3 years, in exchange for eliminating even the chance of a budget-busting price increase.
Of course, at some level, price protection is also a potential future discount. But in the early and middle days, you likely won’t raise pricing a ton on existing customers buying the same edition of your product. View original question on quora The post Is it popular for SaaS to offer price lock guarantee? appeared first on SaaStr.

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