Is it a good idea to give the first customers of a new SaaS startup a discount to get them on board?

Is it a good idea to give the first customers of a new SaaS startup a discount to get them on board?

It is a good idea to give the first customers a fair price so that price isn’t an issue. So you close them, get the reference account, get the learnings, and get off to the races. Time kills deals. Drama kills deals. Friction kills deals. In the early days especially, leads are so precious, the last thing you want to do is kill a deal.

So if your early customers want a discount, just give it to them. If that means you underpriced your early customers a bit, it won’t matter in the long run. Just raise prices on customers 4–100. It won’t matter if customers 1–3 pay less. It’s just the start of a journey to $100m+ in ARR and beyond.

Most importantly, customers need context when they are buying. If they are paying $100 per seat for Salesforce, and your product is about as important and valuable, $100 may be fine. If they are paying $15 a month per seat for Zoom, and your product is about as valuable, $15 per seat may also be fine.

In the early days, though, you don’t quite have the brand Zoom and Salesforce do. So oftentimes, in the earlier days, starting at about 80% of what your comparables cost helps prospects and customers with context. It says yes, you are as valuable as your famous comparable app. But we are pricing a bit lower because we are a new entrant.

Similarly, anchoring high in the enterprise can work. You can say if Salesforce is worth $100 a seat, we are worth $200. But if you anchor higher, you really have to deliver.

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Published on October 27, 2019

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