Charging Enterprise Customers

When I started my journey as a solo entrepreneur, one of the things that directed my way of doing business was that I wanted to keep a high moral standard. Due to my personal education, I would find it really hard to exaggerate features in my product or lie about the company size and things like that. I could see other people not caring about this, following the famous "fake it until you make it", which I fully understand, and that I appreciate is part of the ugly rules of the game in business. Business, like war, does not seem to have any high moral standards… In any case, this has always made me feel uncomfortable, so I have tried to avoid it.

When it comes to business models, and particularly pricing strategies, I can confidently say that I have not maximised the potential of my products. The reason is simple: I have strived to have a "fair" price model. For instance, if I am selling a product, let's say a car, it would be quite annoying, or even illegal, if they had different price tags for different customers based on the customer's wallet or planned use. The car is the same for everybody, and so the price should also be the same.

In the SaaS space, I think everybody knows a lot of companies that are not fully transparent with their pricing; you often see "contact us for price" and things like that. As a small business owner, this kind of message tells me: "don't call us unless you have a lot of money", so if I can find an equivalent product that shows me a clear price model, I will most likely pick that one.

There is obviously one very compelling reason for businesses to have an opaque price model, namely that they earn more money, or at least they think they will. There are some spaces where basically all the competitors offer only an opaque price model, for example in the space of compliance, CRM, financial systems, etc., so if you need a product from these industries you are going to call them and get a price that is going to be expensive but somehow tailored to your business.

Now, let's get to the point of this whole post, which is: can we "compatibilize" a high moral standard and an opaque price model that maximises revenue? And to answer my own question, I think it is actually possible. In fact, I am writing this post after having landed the first customer paying for the "enterprise" license. Let me explain.

In Taskforce.sh (https://taskforce.sh) we have a price model that is based on an unlimited license of the professional version of BullMQ Pro. This license is an "all you can eat" kind of thing, and it is priced at a mere $139/month. The idea behind this price was to allow even smaller businesses to use the software without breaking their bank account, and believe it or not, still for many this is too high a price and they ask for discounts. So now the question to answer is: how much value is our solution actually giving a given customer? Because if the solution is being used as a core functionality for a product that could generate hundreds of millions of dollars, then $139 per month is ridiculously cheap, but if it is used in a product that maybe just sells for a couple of hundred thousand, it may be a bit expensive.

So basically, the reason you can have different prices for different customers without being a scammer is actually because in the world of SaaS, one and the same product can provide a huge difference in value for the end customer. Your solution may be very important to a particular customer, and this customer is generating loads of money thanks to it, so in fact these customers will be glad to pay you more. Why? Because they want to secure your solution, they want it to be well maintained, they want the best support you can give them since your product is so important for them. So in other words, not only will they not see you as a vulture trying to scalp as much as possible from them, they will see your business as a more serious and robust one, ironically the opposite of what you might have thought yourself with the wrong mindset.

Finding tailor-made pricing for your enterprise customers is not easy either, because even though you can charge much more, you must still stay competitive, and it is difficult to know how important your solution is for the customer to begin with. So I can give you an example of how we are doing it. We have transparent pricing for all businesses that have fewer than 100 employees. This pricing, I think, is quite competitive and for most companies of smaller size would not be expensive for the value that we provide. However, for companies over 100 employees, we ask for a call to better understand their needs and how they value our solution. This model opens the possibility of charging 10x, 100x, or even more, for the right customer, without jeopardising adoption for many other companies, and without feeling that you are not doing the right thing.