We represent lots, literally 100s and 100s, of SaaS companies and there are a few nuggets of useful information that we want to share with other SaaS companies when they think about negotiating an enterprise SaaS agreement. Ok, here goes.
- Setting the Right Expectations. I find that setting the right expectation of what the customer is buying is the #1 issue in any SaaS enterprise agreement negotiation. Enterprise customers notoriously want things their way or customized for them (and if you ever read their form agreements you will see what I mean), but in the SaaS world it does not work that way (i.e. everyone gets the same thing for a very low price). So make sure as part of your marketing and selling process you set the right expectations that your customer is getting what everyone else is getting.
- Price and Terms Are Linked. This is a high level issue, but is super important. Think of it this way: when you give an enterprise customer a price quote, it is based on (a) your pricing model and (b) your standard SaaS agreement terms. If you fail to explain this or educate them about this, then you may find that your enterprise customer may get the wrong impression and assume that you can give them whatever they want for that price. The only way to combat this is to tell them that if they want to change the ‘terms of the deal’ then the price will change too. So, in your quotes, consider adding language at the bottom along the lines of:
“This quote is based on [Your Company] standard terms and auto renewal of orders. Any material changes to these terms or not allowing orders to auto renew will result in an increase in [monthly/quarterly/annual] subscription fees.”
- FAQs, Visual Charts, Etc. There are several other ways to communicate your model and set the right expectation. For example, you can create a really good FAQ that explains what your service does and (equally as important) what it does not do. I even have a blog post about this: FAQs as Part of SaaS Negotiations. Alternatively, don’t underestimate the power of a really good visualization or chart, as that is one of the quickest ways to explain what you do.
Here is a good example of pricing visualizations or charts: Link
So remember these three tips before you start any enterprise SaaS agreement negotiations. You can either learn the hard way, or benefit from our knowledge doing lots of SaaS enterprise deals that there are some tricks and tips to help shorten the sales cycle.
Resources: Blog Post regarding Price and Terms are Linked.
Disclaimer: This post is for informational and educational purposes only, and is not legal advice. You should hire an attorney if you need legal advice, which should be provided only after review of all relevant facts and applicable law.