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Estd 4.22.2023
Below is a detailed answer based on the principles and strategies outlined in our saas pricing book, Price to Scale:
Direct Answer
For large organizations issuing RFPs and requesting detailed pricing breakdowns or guarantees on future cost increases, you can adapt your pricing approach by offering modular pricing components. This means keeping your core pricing standardized while carving out add-on capabilities or service levels that can be flexibly priced. Such an approach allows you to provide the necessary detail and guarantees in a controlled manner without revealing your entire pricing engine.Supporting Book Concepts
- In Price to Scale, we discuss a capability pricing approach (see Figure 17) where individual features or capabilities are priced as add-ons. These add-ons might be set as either a fixed fee or as a percentage of the base fee, allowing pricing to naturally scale with your customer’s usage or growth.
- The book also emphasizes that while you may need to provide detailed breakdowns for enterprise-level RFPs, it’s essential not to undermine your pricing structure by disclosing every internal pricing lever. By segmenting your offering into core and additional capabilities, you give your sales team flexibility while maintaining a tight control on your pricing architecture.
- Additionally, as noted in our discussion on price transparency (see Fig. 11), enterprise clients often require personalized offers. Limiting public disclosure of detailed pricing matrices can help your sales team negotiate and tailor proposals that meet both revenue objectives and client requirements.
- Practical Application
- When faced with an RFP demanding detailed breakdowns, consider presenting a two-tiered pricing structure. Provide a base package that outlines standard features along with specific add-on or value-based pricing elements that can include guaranteed caps on annual cost increases.
- For the guarantees on cost increases, you can structure long-term contracts where the base pricing remains constant with predefined escalation clauses for additional capabilities. This detail represents flexibility for the customer while keeping your pricing strategy robust and protected.
- Ensure your sales operations team is equipped with clear internal guidelines so that they can offer targeted solutions without exposing the full complexity of your pricing model.
- Summary
By implementing a modular pricing approach—splitting your pricing into a standardized base and optional, customizable add-ons—you can effectively respond to RFPs from large organizations. This structure not only addresses client demands for detailed breakdowns and cost guarantees but also maintains the integrity and competitive strength of your overall pricing strategy.
In short, adaptable and transparent yet controlled pricing is key. For more in-depth strategies and real-world examples, please refer to the relevant sections in Price to Scale.