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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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Based on our saas pricing book, Price to Scale, the answer is yes—enterprise customers should have flexible billing frequency options, including annual plans, and potentially quarterly options based on their specific needs.
Here’s what our book recommends and the reasoning behind the approach:
• Enterprise Licensing Flexibility:
As noted in our book, enterprise customers typically demand more flexibility when it comes to licensing agreements. They often rely on Enterprise License Agreements (ELA) where bundled offerings and customized terms are common. Allowing these customers options like annual or even quarterly payments helps meet their operational and budgeting preferences.
• Subscription and Prepayment Models:
Our pricing strategy includes a model where customers have the option to prepay all upfront or adopt an annual payment schedule that includes a slight premium. This premium essentially reflects the cost of providing the flexible, subscription-based benefits while keeping the pricing comparable to traditional CapEx models. For example, if an enterprise customer chooses a multi-year subscription plan (or an annual plan as part of that commitment), the pricing structure is designed to incentivize the subscription model without creating a significant gap from the traditional model.
• Considering Quarterly Options:
Although annual payment options are most common in enterprise settings (due largely to multi-year contracting and budgeting cycles), offering a quarterly plan can be examined if there’s clear customer demand. It’s important to ensure that any alternative payment frequency (like quarterly) is also accompanied by pricing adjustments that reflect additional administrative or financial costs, in line with the holistic program approach in our book.
To summarize, our book advises designing your enterprise pricing strategy to be flexible:
- Provide an annual payment option with a slight premium as a standard.
- Consider quarterly options if they align with specific enterprise needs, ensuring you account for any necessary pricing adjustments.
In practice, tailoring the billing options to your enterprise customers’ purchasing habits can improve adoption and satisfaction while maintaining a pricing model that is both competitive and sustainable.