Everything You Need To Know About Enterprise SaaS Pricing
According to SaaStr, only 11% of SaaS businesses just target small to medium-sized businesses (SMBs).
That means the other 89% are enterprise SaaS providers.
Time and time again, moving upmarket to enterprise customers has proven to be one of the biggest milestones that a SaaS company can have. It leads to significantly higher revenues and longer customer relationships.
Now, SaaS pricing for SMB markets has its own strategies and pricing models. But when you get to the realm of enterprise SaaS, the rules change a bit.
In this article, we will talk about how enterprise SaaS pricing works and how you can do it effectively.
What Is Enterprise SaaS?
Enterprise SaaS is software offered on a subscription basis to large organizations.
Now, “enterprise” itself can be a broad term. There are small and medium enterprises (SMEs) and there are large enterprises.
Essentially, what sets enterprise companies apart from SMBs is their size, their annual revenue, and the number of office locations they have.
Being more advanced in all of these aspects leads to pain points that SMB SaaS solutions cannot sufficiently address. But hey—it also means they have significantly larger budgets for an enterprise-grade solution that can meet their needs.
Enterprise SaaS solutions often have the following characteristics:
SaaS solutions designed for enterprises are built to support large organizations with complex workflows and multiple users.
An enterprise software solution must be able to handle large-scale workflows across different teams, departments, and even locations.
They must also be able to support a high number of users with different access levels.
An enterprise SaaS solution is also usually highly configurable to meet the specific needs of each enterprise organization that you’re taking in as a customer.
Each enterprise has its own unique way of doing things. Their processes are often different from the norm.
As such, enterprise SaaS solutions must be flexible enough to accommodate these processes.
Large-Scale Reporting & Analytics
Enterprise software solutions must be able to generate reports at a large scale. They should also be able to support complex data analysis.
This is because enterprise organizations often have a lot of data coming in from different departments and locations.
They need SaaS solutions that can make sense of all this data and provide insights on both small-scale and large-scale levels of their company.
Customized Onboarding and Support
Large organizations and businesses often have complex workflows. That’s why they need more comprehensive onboarding and support than SMBs.
What’s more, a customized SaaS solution also needs a customized onboarding process for its users.
Enterprise SaaS providers must be able to provide this through dedicated account managers or customer success managers.
Enterprise organizations have a higher risk profile than SMBs. They are often targets of cyberattacks due to the large amount of data they have.
Because of this, their software solutions must have top-notch security features to protect enterprise data.
This includes features like data encryption, two-factor authentication, and activity logging.
What Factors Affect Enterprise SaaS Pricing?
As you can see, enterprise SaaS products themselves can get pretty complex. It’s no wonder then that enterprise SaaS pricing is also more complicated than that of solutions designed for SMBs.
There are several factors that affect enterprise SaaS pricing, such as the following:
The Size of the Organization
The size of the enterprise organization is one of the biggest factors affecting enterprise SaaS pricing.
This is because SaaS providers often charge enterprise organizations on a per-user basis. The larger the enterprise organization, the more users it will have, and the more they will have to pay.
The nature of the enterprise SaaS product itself can also affect pricing.
For example, enterprise software products that are more complex and have more features will often be more expensive than simpler enterprise SaaS products.
What’s more, larger organizations tend to have bigger budgets and are willing to pay more for a solution that can improve their operations.
Enterprise SaaS solutions often need to integrate with other enterprise systems.
These include enterprise resource planning (ERP), customer relationship management (CRM), and business intelligence (BI) systems.
The integration needs of enterprise SaaS solutions are often more complicated than those of SMB solutions. They often require more customizations and integrations to work properly.
As such, SaaS providers often charge enterprise organizations more for these services.
SaaS providers often need to host their enterprise SaaS solutions on more powerful and scalable servers.
This is to accommodate the larger amount of data that enterprise organizations have.
The increased hosting costs are often passed on to enterprise SaaS customers in the form of higher prices.
You may also consider charging your enterprise customers for other services like data backups and disaster recovery.
Premium Customer Support & Success Costs
We said earlier that enterprise SaaS providers often need to provide more comprehensive customer success and support services than SMB SaaS providers.
This is because enterprise SaaS solutions are often more complex and have more features. They also need to be customized to the needs of each enterprise organization.
What’s more, you may even need to assign a dedicated customer success manager for them.
This will add to your customer support and success costs.
As we mentioned earlier, around 89% of all SaaS businesses serve enterprise organizations. So if you’re planning to move upmarket and target enterprises, buckle up for fierce competition ahead.
This competition will heavily influence your pricing.
In order to win enterprise clients, you’ll need to price your SaaS product competitively. This often means undercutting the prices of your competitors.
Of course, you can’t just arbitrarily lower your prices. You still need to make sure that you price your enterprise solution in a way that gives you at least a decent profit margin. You need to have the right pricing strategy in place.
Speaking of pricing strategy, let’s move on to our next point of conversation.
Enterprise SaaS Pricing Strategies
With all these factors and demands from enterprises, how do you price your enterprise SaaS product in a way that converts a lot of leads and still maximizes your revenue?
Here are some enterprise pricing strategies you can try:
Have A Value-Based Pricing Strategy
Whether it’s SMB or enterprise SaaS pricing, a value-based pricing strategy is always key to maximizing your revenue without compromising conversions.
With a value-based pricing strategy, you price your SaaS product based on the perceived value it provides to enterprise users.
This means that you need to first understand what kind of value your SaaS product provides to enterprises. Only then can you price it in a way that captures that value.
To do this, start by surveying your target enterprise customers and asking them how much they would be willing to pay for your SaaS product. Use this information to develop a pricing strategy that meets their needs and budget.
Don’t Disclose Your Enterprise Pricing Outright
For SMB solutions, it’s standard practice to display your pricing table out in the open, whatever your SaaS pricing model is.
If you have a user based pricing model, you need to show how much you charge per user. If you have a tiered pricing model, you need to show all of your plans.
SMBs tend to prefer a self-service model for purchasing SaaS solutions. And that’s why a more transparent pricing
But for enterprise customers, you have to let your sales team handle the talking.
Instead of putting your enterprise pricing range on your SaaS pricing pages, you can require potential enterprise customers to contact you for a custom quote.
This way, you can build a relationship with the potential customer before asking them to make a purchase.
It also allows you to get more information about the customer’s specific needs and budget before giving them a price quote.
One way to maximize this strategy is to have your “Contact Us” button lead them to a dedicated landing page. The messaging and design for this landing page should be relevant to your target customers.
You may also want to have an extensive sign-up form. Make it possible for your potential customers to summarize the features they need and their budget.
This will give you a better idea of what they’re looking for. And your sales rep can get one step ahead by preparing an initial custom proposal before even hopping on a call.
Aim For Multi-Year Deals
When selling to enterprise organizations, it’s best to aim for multi-year deals.
This is because enterprise companies are often reluctant to switch SaaS providers. They don’t want to go through the hassle and expense of onboarding a new SaaS solution over and over again.
So if you can lock them in for 2 or 3 years, that’s great news for your SaaS company. Then aim to renew those contracts for as long as possible.
Of course, your potential enterprise customers would need some incentive to commit to a multi-year contract with you.
One way to do this is by giving them a discount on the SaaS product. The longer the contract term, the bigger the discount.
You can also offer them other freebies like free data migration services or extended customer support.
Do keep in mind that you need to deliver on your promises. Otherwise, your potential customers will not hesitate to cancel their contract with you and switch to another SaaS provider.
Final Thoughts On Enterprise SaaS Pricing
For most SaaS businesses today, moving upmarket to enterprise customers is one of the main long-term goals.
After all, having enterprise companies as customers provide higher revenues and longer-term contracts.
But before you can start selling to enterprises, you need to have a specialized pricing strategy in place.
And as you can see in this article, there’s a lot to consider when coming up with an enterprise SaaS pricing strategy.
You need to take into account the needs of enterprise companies, the features and complexity of your SaaS product, and the costs of providing customer support and success services.
With all these factors in mind, you can then come up with a pricing strategy that meets the needs of both you and your enterprise customers.
Looking for more guides that can help you scale your SaaS company? Check out our blog here.