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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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Quick Answer: When customers request a $99 plan but you charge $299, qualify whether they're a fit for a future lower tier, offer a limited feature version if viable, or redirect them to annual pricing with discount—but never negotiate down your standard pricing arbitrarily, as it erodes positioning and creates unsustainable precedents.
The email arrives like clockwork: "Love your product, but we're a small team. Any chance you have something around $99/month?" Meanwhile, your lowest tier sits firmly at $299. This scenario plays out thousands of times daily across SaaS companies, and how you respond shapes everything from your unit economics to your market positioning.
Price negotiation in SaaS isn't just a sales problem—it's a strategic decision point. Handle it poorly, and you'll bleed margin while attracting customers who churn in three months. Handle it well, and you'll protect your pricing integrity while building a qualification system that actually works.
Why Budget Misalignment Happens (And What It Really Means)
Before crafting a response, understand why someone's asking for $99 when you charge $299. It's rarely just about the money.
Market positioning gaps create confusion. If your marketing attracts early-stage startups but your product serves mid-market companies, you'll constantly field requests for pricing that doesn't exist. The prospect isn't wrong—your positioning is unclear.
ICP misalignment is the most common culprit. That $99 request often signals someone outside your ideal customer profile. They may genuinely need a simpler solution, have fundamentally different use cases, or operate at a scale where your product provides negative ROI for them.
Perceived vs. actual value disconnects happen when prospects don't understand what they're buying. They see "project management tool" and compare you to Trello's free tier, missing that your platform handles enterprise workflows worth 10x your price.
Understanding which dynamic is at play determines your response strategy.
The Critical First Step: Qualify Before You Negotiate
Handling low-budget leads effectively means qualifying for price fit before discussing alternatives. Never jump to discounting without understanding the full picture.
Ask these qualifying questions:
- "Help me understand your current workflow and what problem you're solving."
- "What's driving the $99 budget specifically—is it a hard cap or a preference?"
- "Who else is involved in this decision, and what's their evaluation process?"
- "What happens if you don't solve this problem in the next 90 days?"
Adapt the BANT framework (Budget, Authority, Need, Timeline) to uncover whether this prospect could ever become profitable. A startup with genuine budget constraints but strong growth trajectory differs fundamentally from a small team with no scaling plans.
Disqualification criteria worth establishing:
- Company size below your minimum viable customer threshold
- Use case requires less than 30% of your feature set
- No path to expansion within 12-18 months
- Budget constraint is philosophical ("we don't pay more than $99 for any tool")
Four Strategic Responses to "$99 Instead of $299" Requests
Once you've qualified the prospect, choose from these price negotiation SaaS responses:
Option 1: Offer a Self-Service or Limited Feature Alternative
If you have a lower tier or can create a meaningfully reduced offering, this works. The key word is "meaningfully"—stripping out one feature doesn't justify a 67% price cut.
A viable limited alternative might include: core functionality only, no integrations, email-only support, and usage caps. The prospect gets value, you maintain margin, and there's an upgrade path when they grow.
Option 2: Annual Commitment Discount (Conditional)
Offering 15-20% off for annual prepayment is standard practice. For a $299/month product, annual billing at $249/month ($2,988 upfront) rewards commitment without destroying pricing.
Never exceed 20% for annual discounts. Beyond that, you're training customers to wait for deals.
Option 3: Pilot or Trial Period at Reduced Scope
A 30-60 day pilot at reduced pricing can work for prospects with genuine uncertainty about value. Structure it as: "Let's run a 45-day pilot at $149/month with limited seats. If you hit [specific success metric], we move to standard pricing."
This only works with clear success criteria and a hard end date. Open-ended pilots become permanent discounts.
Option 4: Politely Disqualify and Keep Door Open
Sometimes the right answer is no. A direct but respectful disqualification sounds like: "Based on what you've shared, our platform is probably more than you need right now. I'd recommend [alternative solution] for your current stage. When you're handling [trigger event], let's reconnect."
This preserves the relationship while protecting your time.
What Never to Do: Dangerous Negotiation Mistakes
Poor handling of SaaS pricing objections creates lasting damage.
Arbitrary discounting teaches customers that your prices are suggestions. Once word spreads that you negotiated down to $99 for one customer, every prospect expects the same treatment.
Setting precedent without policy means one "special exception" becomes your de facto pricing. Document any approved discounting criteria and stick to them.
Undermining your value proposition happens when you say "yes" to $99 without reducing scope. You've just communicated that your $299 product is worth $99—and the customer will remember that when renewal arrives.
Here's the math that matters: A $99/month customer with typical SaaS economics (30% gross margin after hosting and support) generates roughly $356 in gross profit annually. If your CAC for that customer is $400 (modest for B2B SaaS), they need to stay 14+ months just to break even—before accounting for any expansion. These customers often have negative unit economics. Good pricing strategy means saying no to wrong-fit customers.
When to Build That $99 Tier (And When Not To)
Repeated $99 requests are market signals worth analyzing. But not every signal demands action.
Consider building a lower tier when:
- You're losing 20%+ of qualified pipeline to budget constraints
- A clearly defined segment would be profitable at lower price points
- You can automate onboarding/support to reduce CAC proportionally
- The feature set naturally segments (self-service vs. assisted)
Avoid building a lower tier when:
- Requests come primarily from non-ICP prospects
- Support costs don't scale down with price
- It would cannibalize your $299 tier without expanding total market
- Your product's value proposition requires the full feature set
Run the numbers: If a $99 tier requires the same support infrastructure as $299, you've created a margin problem, not a growth opportunity.
Scripts and Email Templates for Common Scenarios
Scenario 1: Qualified prospect with genuine budget constraints
"Thanks for your interest in [Product]. I understand budget is a real consideration at your stage. We offer annual billing at $249/month, which brings the commitment closer to your range while giving you full platform access. Alternatively, I can show you our Starter tier at $149/month—it covers [core features] without [advanced capabilities]. Would either of those work for your immediate needs?"
Scenario 2: Prospect outside ICP
"I appreciate you reaching out. Based on what you've described, I think our platform might be more robust than what you need right now. For teams your size focused on [their use case], I'd actually recommend looking at [alternative]. That said, when you're [growth trigger], we'd be a great fit—mind if I check back in Q3?"
Scenario 3: Prospect trying to negotiate arbitrarily
"Our pricing reflects the value we deliver to companies at your scale—our average customer sees [specific outcome]. We don't negotiate on standard pricing, but I'm happy to discuss annual billing options or help you build a business case internally. What would make this easier to approve on your end?"
Handling budget objections effectively isn't about winning negotiations—it's about building a qualification system that protects your pricing while identifying genuinely good-fit customers who can grow with you.
Download our SaaS Price Negotiation Playbook—includes qualification frameworks, response templates, and decision trees for handling budget objections.