David_Warran

Annual billing objection, how do you handle it?

Hello there lovely people,

So to provide some context, we just recently went through a pricing model change in SaaS. All the addons, pricing itself, features. The primary thing that caught everyone off guard has been the biggest challenges for us now to handle is now the annual billing, since prior we had Monthly, Quarterly, Half-Yearly.

Now for the question, I am sure a lot of people here work in SaaS, a lot of people get different objections. How do you handle the objections of the billing terms? example being: "We are okay with the monthly price, but we are not okay with paying for the year up front."

👑 Sales Strategy

📈 Closing

☁️ Software Tech

18 comments

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SaaSam

Politicker

Account Executive

Just don't speak in terms of monthly price anymore. When you price things out stick to the annual cost and make sure you're constantly building and reiterating the value behind your solution.

The answer here is pipeline.

DungeonsNDemos

Big Shot

Rolling 20's all day

Why is the answer ALWAYS pipeline??? Oh right because it fixes our problems and gives us room to breath lol

SaaSam

Politicker

Account Executive

I wish I could upvote this multiple times.

jefe

Arsonist

🍁

No fun to deal with, but you kind of have to.

At least $5-7K isn't a crazy amount upfront. I was worried you were going to say something like $50-100K

saaskicker

Celebrated Contributor

Enterprise AE

What's your average deal size?

David_Warran

Valued Contributor

Average deal size is roughly 5k-7k, some cases have unicorns that are 20k+. But it’s very high velocity, average deal cycle is 2 weeks

saaskicker

Celebrated Contributor

Enterprise AE

Follow up question - does your product provide value right out of the gate?

If you can use excel/google sheets to show return on investment over a 12-month period this conversation is much smoother. Objection comes in about paying for the year up front - well prospect, as we just covered on your 5-7k investment you can expect X amount more revenue/customers/clicks whatever you're selling -- once you nail this you can really alley oop yourself in the discovery process. So buyer, what's the typical return you look for on a product like this? is it 2x or 3x? and then you can say in our conversations you expect a 2x return on 5-7k, our product can return you 4x+ what is your hesitation?

last point to make here - i used to show pricing as monthly or annual, and just jack up the monthly price to make it a no brainer to go annual $5-7k today or $1000/month, those are your options - you save 50%. we could do some flexible billing and on the off chance i had someone agree to pay 50% over list monthly the billing team usually laughed and said lets do it.

David_Warran

Valued Contributor

Yes, our platform automates a very annoying and manual process that eats up a lot of time and has a lot of room for human error where multiple people are usually involved.

However, we are in quite a competitive environment, there are alternatives to us that are cheaper since we are more of a premium level solution.

Up to a certain bracket (deal size), we can only do annual billing, when the prospect's potential deal size climbs over that bracket we can do quarterly.

I understand your approach and your value prop, that sounds very efficient and doable, however, from our perspective where each company we work with has very different needs, we can't really apply a cookie-cutter approach. The closest thing we've done is ask what's your hourly pay and then after taking into account how much time they spend on that task, I tell them this is how much $$$ you're losing on a monthly/annual basis not automating this process.

saaskicker

Celebrated Contributor

Enterprise AE

whatever it does, and however it helps across the multiple use cases --> quantify the pain. hours, dollars, etc. and use that to back up the price. could be an interesting team whiteboard session brainstorming ways to quantify pain.

Corpslovechild

Politicker

Inbound Sales Manager

Great question

Pachacuti

Politicker

They call me Daddy, Sales Daddy

So they want to pay the annual amount monthly? I don’t see a problem with that unless your company is so cash strapped that you need all the money now.
Do you offer a discount to pay for a year upfront? Or some other carrot?

David_Warran

Valued Contributor

Not exactly, our goal is only year up-front payments

FormerStartupJobHopper

Tycoon

That's tough. If that's the new rule that's the new rule. I always lead with annual billing and then as needed negotiate down to quarterly. We are not allowed to do monthly. I don't often lose deals for that reason, if people want monthly quarterly usually keeps them sated.

You will def lose deals to this. Feels a little short sighted by them, unless your average sale price is very low? What is that figure?

If I were the dictator of your company I'd at least do a quarterly option and maybe run some business credit checks to determine if they are trustworthy to pay. People don't want to pay upfront.

David_Warran

Valued Contributor

Average deal size is roughly 5k-7k, we do have unicorns 20k+, we are closing and reaching targets, but I feel like there is an opportunity to handle those lost ones more effectively. That's why I decided to pop this question here

For bigger deal sizes we do have an option for Quarterly billing, but up to that average deal size, everything is only annual up-front.

CuriousFox

WR Officer

🦊

Value explains price.

nomdeguerre

Executive

Account executive

Tell them the truth which likely is that it’s too time consuming and expensive to issue invoices every month for all your customers. You want to keep your price at the current level of your product which delivers benefit xyz. Now we can discuss a monthly pricing with our finance team, but the monthly cost would go up. Would you want to do that or would you rather have the lower annual pricing mr customer.

Corpslovechild

Politicker

Inbound Sales Manager

annual contract but bi-annual or quarterly payment terms

LordBusiness

Politicker

-1

Chief Revenue Officer

It’s really just about setting CLEAR expectations for the very early stages of the deal, where you are missing is that the objection is even happening at the stage of the deal you are describing. I also liked the advice about not talking about the monthly price anymore. And really liked the comment about pipeline - cause if you don’t have enough to confidently walk away from a deal, your toast

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David_Warran

Annual billing objection, how do you handle it?

18 comments

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