Target Discounts · SaaS Pricing

4d ago in Pricing

Target Discounts

Hey folks.

Context: I'm working on introducing better pricing guidance for our B2B SaaS product that's sold using a sales led motion. Today we just have list prices and we want to introduce target prices. We've never published our list prices nor put them on customers' agreements so we have some flexibility with changing these to fit our needs. We do want to move to showing customers the list price, discount, and net pricing on agreements. This will help us more effectively expire discounts that are intended to be short term (e.g. 1st year).

Question: When you're thinking how to set list vs. target price (target discounts), what have you seen work well?

Hypothesis: My initial thought is to set the target price 10% - 20% below the list price. Here's my rationale:

If sales starts the negotiation at list, it gives them some room to negotiate down to target
If we want to setup most of those discounts as 1st year only discounts, then the price jump for customers isn't painfully large
Our discount escalation policy is setup so AEs can discount 10%, Sales Directors (20%), RVPs (30%), etc. Targeting a discount of 10% to 20% should keep most deals from reaching the more senior approval levels.

Would love to hear some thoughts on the topic if anyone has any.

Thanks in advance!

Steve

0 comments