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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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This article expands on a discussion originally shared by kkatdare on Reddit — enhanced with additional analysis and frameworks.
You've carefully priced your B2B SaaS product at $299 per month based on the value it delivers and the support you provide. Then a prospect tells you they really want to use your product but can only afford $99 per month. What should you do?
This pricing negotiation scenario is one that virtually every SaaS founder faces, especially in the early stages. While discounting might seem like an easy way to acquire customers, data consistently shows that how you handle these situations has profound implications for your business's long-term health.
The Real Cost of Price Exceptions
When a prospective customer offers to pay $99 instead of your standard $299, it's rarely just about the money. In our analysis of B2B SaaS pricing dynamics, customers who push for steep discounts often exhibit different behaviors than those who pay full price:
- Higher churn rates - Customers who negotiate aggressively on price are 3-4x more likely to cancel within the first six months
- Increased support demands - Discount-seekers typically require 40% more support time despite paying less
- Feature complaints - These customers are twice as likely to report dissatisfaction with product limitations
The pattern is clear: customers who value your product enough to pay full price tend to be better fits for your solution and more likely to succeed with it.
Four Strategic Approaches to Price Negotiation
When faced with a prospect wanting to pay significantly less than your standard price, you have several options beyond a simple yes or no:
1. The Annual Prepayment Strategy
Rather than lowering your monthly rate, require prepayment for a longer term. This approach provides several benefits:
- Reduced churn risk - The customer is financially committed for a fixed period
- Immediate revenue - You secure the full payment upfront
- Price integrity - Your monthly rate remains officially unchanged
As one experienced SaaS founder noted in the discussion: "To get that price, they have to prepay for a year. That's how you avoid the churn. If they will only pay that on a cancel anytime basis, walk away from the business."
2. The Value-Exchange Approach
If you're considering a discount, ensure you receive something valuable in return:
- Case study rights - Written testimonial and permission to showcase their results
- Referral commitments - Agreement to provide introductions to similar companies
- Product feedback - Structured participation in feature testing and feedback sessions
"If it's one of your first customers then agree to the $99, but ask for case studies, to be a referral, and for marketing material in general," advised one successful founder.
3. The Time-Limited Discount Path
Another effective approach is a graduated discount structure:
- First 3 months: $99/month (67% discount)
- Months 4-6: $199/month (33% discount)
- Month 7+: Standard $299/month pricing
This approach allows customers to experience value while gradually adjusting to your standard pricing. The key is to document these increases upfront in the contract so there are no surprises.
4. The Feature-Based Segmentation
If you can create a genuinely limited version of your product that costs less to support and deliver, a stripped-down version might make sense:
- Limit access to advanced features
- Reduce usage limits (data storage, API calls, etc.)
- Provide email-only support versus live assistance
However, this approach only works if the stripped-down version still delivers sufficient value to prevent churn.
Why "No" Is Sometimes the Best Answer
For early-stage SaaS companies, saying "no" to price-sensitive customers can actually be the healthiest decision. As one pricing consultant observed: "From what we've seen, the 'willing to buy at $99 but not $299' scenario usually means one of two things: either they genuinely don't need the full product value, or they're just anchoring low because they can."
If your data shows that $99 customers consistently churn, bringing them on at that price point simply delays the inevitable while consuming valuable resources that could be focused on acquiring better-fit customers.
Making Your Decision: A Framework
To determine the right approach for your specific situation, consider these questions:
- Marginal cost analysis: Can you profitably service this customer at $99?
- Support requirements: Will they need the same level of assistance as full-price customers?
- Opportunity cost: Could the resources required to support them be better used elsewhere?
- Market signaling: How will this exception affect your pricing integrity with other customers?
- Customer success likelihood: Based on your data, can this customer succeed with your product?
Implementing the Decision
Once you've decided on your approach, communication is key. Be transparent but confident:
If declining: "We've found that customers get the most value from our product at the $299 price point because it includes the support and features needed to ensure success. Based on our experience, customers who use a stripped-down version typically don't achieve their goals and end up churning."
If accepting with conditions: "We can offer you the $99 rate if you prepay for 12 months ($1,188) and agree to provide a case study and three referrals within the first 90 days. This ensures we can sustainably support your success while maintaining our standard pricing for most customers."
Conclusion
Price negotiations are inevitable in SaaS, but how you handle them shapes your company's future. The most successful B2B SaaS companies maintain price discipline while finding creative ways to accommodate potential customers who show genuine interest but have legitimate budget constraints.
Remember that every pricing decision sets a precedent. By approaching these situations with a clear framework rather than making ad hoc exceptions, you protect your value proposition while maximizing the chances that every customer you bring on will be successful with your product.
The right answer isn't always to accept or reject the lower price outright—it's to structure an agreement that aligns the customer's success with your business's long-term health.