SaaS pricing Structure problem

Hi Guys, wondering if any of you got an idea what to do here:


  • Our pricing model is typical SaaS - the more seats you buy, the bigger the discount per seat. For the sake of example, let's say 100 seats starts at $100 and then we reduce 5% for each additional 100 (i.e 200 at $95 each etc').
  • In addition, we charge a fixed License fee regardless of the number of seats.
  • I am now in the final stages of a deal with a prospect and he objects this model.
  • Due to the nature of the prospect business, he needs many seats but won't be able to cover the cost until a later stage (let's say 6-8 months). So he wants 500 seats but can't/won't pay a $85 each on day 1.
  • f I can find a solution to that, he is even willing to commit to purchase a large amount of licenses (1,000) within 12 months, at the regular discounted rate ($50)
  • Other than giving an additional discount, is there a smarter way to maximise the deal size while still helping the prospect?
๐Ÿ‘‘ Sales Strategy
๐Ÿ“ˆ Closing
๐Ÿ“ณ SaaS
8
Sunbunny31
Politicker
4
Sr Sales Executive ๐Ÿฐ
Does he need 500 seats on day 1?

And you say โ€œdue to the nature of the prospect businessโ€ he canโ€™t or wonโ€™t commit to paying until later. Whatโ€™s this business? And isnโ€™t the inability to pay until later a huge red flag for your org? Can you explain this a bit more?
CoffeeIsForPosers
Fire Starter
3
Head of Regional Sales
It's a bit difficult to explain, but to simplify things, he plans to "resale" those seats to his customers. So his problem is liquidity - he can't afford to pay the 500 seats upfront. Hope that clarifies. And you can assume it's not a red flag since we know this prospect well.
Sunbunny31
Politicker
5
Sr Sales Executive ๐Ÿฐ
So his practice of reselling the seats is common for your customers? If I am understanding correctly, he's enabling his customers to use the seat and will be charging for it. Assuming this doesn't put him into competition with you (as these wouldn't be seats you'd be able to sell).

And forgive me, why does knowing him well mean that his lack of liquidity isn't an issue? My concern would be overpromising and then being unable to a) resell the seats and b) default on payment/require restructuring in a few months. How does he know he'll get that traction? How do you know?

Sorry, I'm asking a lot of questions because I don't know your solution well enough to know what your prospect is doing, and I'm also suspicious of my own grandma in situations like this.
braintank
Politicker
2
Enterprise Account Executive
Yeah this sounds shady
jefe
Arsonist
0
๐Ÿ
Definitely seems shady
braintank
Politicker
3
Enterprise Account Executive
Can you structure a deal with a delayed start date. E.g. buy 500 now then 6 months later they get another 500?
Diablo
Politicker
2
Sr. AE
Is this a monthly subscription or annual? Did you get clarity on how much can he pay now? As the prospect is known well, do you have any flexibility option for the remainder - net60/90?
Sunbunny31
Politicker
1
Sr Sales Executive ๐Ÿฐ
yeah, this is kind of where I was going. One other thought about the rate - if $85 is the rate per seat for 500, if he doesn't need to start with 500 at the jump, can you sell him X number of seats at that rate and scale up over time? Let him have the better rate for a lower number of seats at first?
TennisandSales
Politicker
2
Head Of Sales
is this customer an ideal customer in your company's opinion?
WhoDey
Opinionated
0
VP of Sales
Sounds like you just need to restructure the payment terms, not the pricing terms. Don't further discount the seats, just backload the payment over a period of time that he can live with. Otherwise, start with a lower seat count vs. 500 out of the gate.
Maximas
Tycoon
-4
Senior Sales Executive
For me the only other option is trying to go with extra discount to avoid losing the sale.
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