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Estd 4.22.2023
Introduction
Enterprise deals represent significant revenue opportunities for SaaS companies, but they also come with unique challenges—particularly around pricing strategy. Unlike standard pricing tiers displayed on your website, enterprise deals typically require custom quotes and contracts that reflect the complex needs, scale, and strategic importance of large customers. According to Forrester Research, companies that implement effective enterprise pricing strategies see 15-30% higher revenue growth compared to competitors with rigid pricing models.
This article explores proven strategies for developing custom enterprise quotes and contracts that maximize deal value while building strong, sustainable customer relationships.
Understanding the Enterprise Customer Mindset
Enterprise customers differ fundamentally from SMB or mid-market customers in several ways that directly impact pricing strategy:
Budget and Approval Processes
Enterprise deals don't just involve larger budgets—they involve completely different purchasing workflows. According to a study by Gartner, enterprise software purchases involve an average of 11 stakeholders, each with different priorities and concerns. Procurement teams, legal departments, IT security, and C-suite executives may all need to approve significant purchases.
Value Perception
Enterprise customers evaluate SaaS purchases not just on features but on strategic value to the organization. McKinsey research shows that 73% of enterprise buyers prioritize solutions that deliver measurable business outcomes over those offering the most advanced features.
Risk Assessment
Large organizations face proportionally larger risks when implementing new software solutions. Downtime, security breaches, or failed implementations can cost millions. Your pricing structure needs to account for the enterprise risk calculus.
Core Components of Enterprise Pricing Strategy
1. Value-Based Pricing Over Cost-Plus Approaches
The most successful SaaS companies have moved away from cost-plus pricing (calculating costs and adding a margin) to value-based pricing for enterprise deals. This approach anchors pricing to the tangible business value your solution delivers.
For example, Salesforce famously positions its CRM platform based on average revenue increase per sales rep, rather than on the cost of delivering the service. By quantifying the ROI a customer can expect, they justify premium pricing.
2. Custom Price Metrics That Align With Customer Value
The price metric you choose—per user, per transaction, per asset managed, etc.—should align with how enterprise customers derive value from your product.
Snowflake's consumption-based pricing model charges based on actual computing resources used rather than flat subscription fees. This creates alignment between cost and value for large data operations that might have highly variable usage patterns.
According to OpenView Partners' 2022 SaaS Benchmarks Report, companies using value-aligned pricing metrics grow 25% faster than those using standard per-seat models.
3. Tiered Structure With Enterprise-Specific Features
Effective enterprise pricing typically includes:
- Base platform fee
- Volume-based pricing for core usage metrics
- Premium fees for enterprise-specific capabilities (advanced security, dedicated support, custom integrations)
Slack's Enterprise Grid tier, for example, includes organization-wide identity management, data loss prevention integrations, and enterprise mobility management—features that specifically address enterprise requirements and command premium pricing.
Developing Custom Enterprise Quotes
Discovery-Driven Quoting Process
Custom quotes should emerge from a thorough discovery process, not from a hasty discount on list pricing. This process should:
- Map stakeholders and decision criteria - Understand exactly who needs to approve the purchase and what metrics matter to them
- Quantify potential value - Work with the customer to estimate ROI specifically for their use case
- Identify unique requirements - Document any custom development, integrations, or implementation support needed
A study by Corporate Visions found that sales processes that include customer-specific value quantification close at 2.5x the rate of those that don't.
Quote Structure Best Practices
Your quote document should be more than numbers—it serves as a critical selling tool:
- Executive summary - Brief value proposition tailored to this specific customer
- Solution specification - Exactly what the customer is getting
- Value justification - ROI calculation based on customer-specific metrics
- Timeline and implementation - Clear next steps
- Pricing breakdown - Transparent explanation of how numbers were calculated
Avoid presenting a single price point. According to pricing strategy firm Simon-Kucher & Partners, presenting three tiers within an enterprise quote (good, better, best) increases average deal size by 35%.
Contract Structure and Terms
Term Length Optimization
While month-to-month flexibility is prized in SMB markets, enterprise deals benefit from longer-term commitments:
- 3-year contracts with escalating annual values are becoming standard
- Annual pre-payment options with meaningful discounts (typically 15-20%)
- Renewal provisions that protect against excessive price increases
According to KPMG's SaaS Survey, companies with predominately multi-year contracts have 2x higher customer lifetime value compared to those with primarily annual contracts.
Success-Based Contract Structures
Innovative SaaS companies are incorporating success metrics directly into contract terms:
- Performance-based pricing that ties fees to achieved outcomes
- Phased implementation with payment milestones
- Risk-sharing models where portions of fees are contingent on hitting agreed KPIs
Workday offers performance warranties in enterprise contracts that guarantee specific uptime and performance metrics, with financial consequences if targets aren't met.
Professional Services and Implementation
For enterprise deals, don't treat professional services as a cost center—position it as a value driver:
- Packaged implementation services at tiered levels
- Custom integration development
- Dedicated customer success resources
- Executive business reviews and strategic consulting
ServiceNow reports that customers who purchase professional services show 40% higher renewal rates and 27% more expansion revenue than those who don't.
Negotiation Strategies for Enterprise Deals
What to Discount (and What Not to)
Discounting is inevitable in enterprise sales, but should be strategic:
- Discount volume usage tiers rather than base platform fees
- Maintain margins on core product while offering flexibility on add-ons
- Use multi-year commitments to justify larger discounts
- Never discount professional services without reducing scope
A study by Price Intelligently found that companies with structured discount governance grow 30% faster than those with ad-hoc discounting practices.
Creating Win-Win Compromises
Effective negotiation isn't about giving in—it's about finding mutually beneficial alternatives:
- Extended payment terms instead of deeper discounts
- Future growth commitments in exchange for initial pricing concessions
- Pilot programs with success-based expansion
- Reference customer status and case study participation in exchange for favorable terms
Measuring Enterprise Pricing Effectiveness
Track these metrics to evaluate and refine your enterprise pricing approach:
- Net dollar retention - Should be significantly higher for enterprise vs. other segments
- Discount variation - Standard deviation of discount percentages (lower is better)
- Win rate by pricing structure - Which models close most effectively
- Implementation success rate - Ensuring pricing aligns with successful outcomes
- Expansion revenue percentage - How well your pricing facilitates growth
Conclusion
Effective enterprise pricing strategy goes far beyond simply adding a "Contact Sales" button to your pricing page. It requires a sophisticated approach that aligns your pricing structures with how enterprise organizations operate, purchase, and derive value from your solution.
By implementing thoughtful custom pricing strategies—anchored in customer value, structured to align incentives, and flexible enough to meet unique requirements—you can significantly increase deal sizes while building the foundation for long-term customer relationships.
The most successful SaaS companies don't view enterprise pricing as a transactional negotiation, but rather as a strategic framework for creating mutual value. With the approaches outlined in this article, you can transform your enterprise pricing from a potential source of friction into a competitive advantage that drives sustainable growth.