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Estd 4.22.2023
Based on our pricing strategy book, Price to Scale, it’s generally advisable to price professional services—like onboarding, training, and custom work—as distinct, one-time fees rather than bundling them into the subscription. Here’s why:
• Clear Value Attribution: Our book emphasizes capability pricing, where each component of your offering (the core software and any add-ons) has its own value. Charging separately for professional services helps you clearly communicate the added value of those services.
• Flexibility for Scaling: When you separate one-time fees from the recurring subscription, you give your pricing structure the agility to scale. For enterprise customers, whose needs often vary – especially in implementation and customization – having distinct fee lines allows pricing to adjust based on the scope or size of the professional services required.
• Simplified Sales and Negotiations: Having a clear separation between subscription and service fees can make discussions with enterprise buyers more transparent. Our book discusses that clients often expect to pay fees for these services, which streamlines the negotiation process and sets proper expectations from the outset.
• Revenue Recognition Clarity: Separating the fees also helps with revenue recognition and internal financial planning. It avoids potential confusion about what portion of the total deal reflects recurring value versus one-off investments.
In summary, our SaaS pricing book, Price to Scale, supports the idea that charging for professional services separately (as add-ons) can be a smart approach. This strategy not only acknowledges the distinct value of those services but also provides flexibility and clarity across the sales process and revenue management.