.png)
Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Below is a concise answer based on the principles outlined in our pricing strategy book, Price to Scale:
Begin with a Core Capability Price
Our book explains that enterprise pricing should typically start with a base “capability” price—that is, a fixed fee that reflects the core value your product provides. When dealing with enterprise contracts, the key is to balance a guaranteed base price with the possibility to adjust for future growth.Incorporate Modular and Add‑On Pricing
Given that multi-year agreements lock in pricing over an extended period, you should consider separating the core software capabilities from additional, high-value functions. This way, your contract can include add‑on pricing for new features or increased usage. The modular approach (discussed in our book as a way to break out distinct value components) allows you to guarantee a base rate while still capturing value as usage or features expand.Plan for Future Value and Uncertainty
A guaranteed pricing contract might help win enterprise customers, but it carries the risk of leaving money on the table if the value of your product increases over time. To mitigate this, consider incorporating:
- Annual review or escalation clauses that accommodate inflation or additional usage
- A structure that preserves the ability to add “point products” (specific high-value add-ons) later on without having to re-negotiate the entire contract
- Use a Structured Pricing Framework
Reflect on the “Good‑Better‑Best” framework described in Price to Scale. This approach demonstrates how different tiers can serve not only varying needs but also enable you to introduce more expensive add‑ons or additional capabilities over time. For multi-year contracts, ensuring that some elements of the price are fixed (to provide pricing certainty) while others remain flexible can be a winning compromise.
In summary, the right approach is to lock in a fair base (capability) price for the multi-year commitment, while maintaining flexibility through modular add‑on pricing or periodic adjustments. This strategy aligns with the overall philosophy in Price to Scale: secure the enterprise deal with guaranteed pricing upfront, yet design contracts that allow you to capture increasing value over time.