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Estd 4.22.2023
Based on the principles outlined in our SaaS pricing book, Price to Scale, enterprise clients generally gravitate toward more predictable pricing structures, such as standard licensing with volume or enterprise discounts, rather than complex outcome-based or risk-sharing models. Here are some key points to consider:
• Preferred Predictability: Enterprises typically appreciate pricing that clearly ties to usage or capacity—like sliding volume discounts—because it aligns with budgeting and forecasting. Our book highlights how larger clients often receive lower per-unit rates (for example, paying around $0.60 per unit compared to $2.10 for smaller deals) to reflect their volume, which reinforces predictability and clarity.
• Complexity of Outcome-Based Models: While outcome-based pricing (pay-for-results) can be attractive in theory, it brings additional layers of complexity in both risk identification and measurement. These models require well-defined outcomes and shared metrics, which may not always be straightforward with large-scale enterprise deployments. The administrative burden and potential for disputes often make this approach less appealing compared to traditional licensing.
• When to Consider Risk Sharing: There may be niche situations or highly differentiated solutions where outcome-based or risk-sharing models could align incentives between the provider and the customer. However, as a general rule—and as discussed in Price to Scale—most SaaS companies find that sticking to standard licensing models, even for big deals, offers a simpler and more scalable approach.
• Focus on Value-Based Segmentation: Our book also emphasizes packaging solutions (such as good–better–best models) to cater to various segments, including enterprise customers. This lets you tailor offerings and pricing in a way that maximizes perceived value without necessarily introducing the complexities of risk-sharing mechanisms.
In summary, while outcome-based pricing is not inherently off the table, the simplicity, predictability, and ease of scaling traditional licensing models generally make them the preferred choice for enterprise clients as described in Price to Scale. For most companies, particularly those scaling their offerings, adhering to standard models with well-calibrated volume discounts is advisable.