What kind of discounts or custom contract terms do enterprise customers typically expect (for large user counts, multi-year commitments, etc.)? How can we accommodate those without undermining our overall pricing model for others?

Below is a concise answer based on Price to Scale’s guidance:

• Enterprise customers typically expect significant volume-based discounts—up to 80% off list pricing—while smaller deals might only see discounts of about 20%. In practice, this means that for large user counts or multi-year commitments, enterprise deals naturally secure lower per-unit prices (for example, around $0.60 per unit versus about $2.10 for smaller deals).

• In addition to volume discounts, these customers often negotiate custom contract terms. Examples include:
– Adjusted payment terms (e.g., moving from Net30 to Net60 or milestone-based payments)
– Specific service specifications (such as custom reporting tools or integrations)
– Enhanced indemnity clauses that protect them against potential risks

• To accommodate these requests without undermining your overall pricing model, Price to Scale recommends a structured approach:
– Segment your customer base and vary your offerings. This allows you to provide tailored discounts or contractual concessions to enterprise customers, while protecting the integrity of deals with smaller customers.
– Offer alternatives that add value instead of making unilateral concessions. For instance, rather than simply discounting, consider offering an upgrade or bundling services in a way that reinforces the product’s value.
– Consider revising your tier lineup so that discounts or alternative pricing for enterprise contracts don’t directly undercut what’s available to smaller segments.

In summary, by understanding that large users are expected to secure deeper discounts through both pricing and tailored contract terms, and by strategically segmenting your offerings, you can protect overall pricing discipline while still meeting enterprise demands. For additional insights, refer to our discussions in Price to Scale (see Chapters on discounting levers and customer segmentation).