There’s no question that getting a full year or two of cash up-front can be magical to cash flow in SaaS.
Back in the day, we set a goal of collecting at least 110% of our MRR in cash each month. They key was as many annual pre-paid deals as possible.
But … customers in SaaS know what they want, and how they want to pay.
- Some customers will take a discount to pre-pay annually. Others won’t.
- Some will want to start with a small pilot or a phased roll-out. Others don’t.
You can ask for pre-paid annual, and provide a nominal discount for it. Many customers will say yes, the bigger and more enterprise ones. Especially if they have already budgeted that full amount for the entire year.
But if they don’t bite, don’t add friction to the deal. Give them the term they want, and move on.