Getting to Initial Traction

Next Time — Ask For $1,000,000. A Year. I’m Not Kidding.

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Jason Lemkin

There are two exercises I like to do with SaaS companies marching up-market.

The first is to challenge them to double their highest ACV ever on the next similar prospect.  If your highest paying customer pays you $30,000 a year … even if all the rest pay you only $3,600 a year (a not uncommon scenario) … then why can’t you get $60,000 a year from the next Big Prospect that come in the door?

What’s the difference between $30k and $60k a year, after all?  I mean, really?

What I do know is if one customer values you a product enough to pay you $30,000 … there’s another that will pay $60,000.  Maybe it’s a customer that’s 2-20x larger.  Maybe it’s just a different situation.  Maybe it’s just getting a real VP of Sales that knows how to do the ask 🙂

Screen Shot 2015-11-12 at 8.44.27 AMWhatever it is — ask.  Maybe you can get it.  And if you can’t … you’ll learn why.  Maybe it’s one core feature gap.  Maybe you’re aren’t “enterprise enough”.  Whatever it is … you can probably build that, and fill that gap.

When I challenge founders to do this … it almost always works.  They report back 30, 60, 90 days later that, what do you know … the next Big Prospect paid 2x whatever their highest record ACV deal was to date.  Sometimes for the same exact product.  Sometimes with a feature commit as part of the deal.  But one way or another … they find a way.

Then, once they’ve done that, doubled pricing at the high end at least … maybe later, once they get past $5m ARR or so and build up confidence … I ask them to ask for $1,000,000 next time.  Or at least — $500,000 a year.  OK, more often, $500,000.

If it’s a true solution sale.  More on the difference here.

Now, if your biggest customer pays you $60,000 today … asking for $500,000 a year, or even $1m, may sound nuts.

But turns out it isn’t.

Do it when a prospect asks you for something that pushes your solution.  When it’s clear they want to buy, but they want the product to go further than it does today.

“Well, we don’t do that today.  But for $700,000 a year I can commit to having that by Q2’16.”

Try that line.

It might work.  And if it doesn’t … I bet you worst case, you will learn.  If it’s a Big Customer, and the problem you are solving is important … it will more often create a dialogue than a No.

Variant #2 is to go back to an existing, successful customer and say “We want to do more for you.  What could we do to get the deal up to $500,000 or $1m a year?”  This will create a dialogue.  And maybe even a Yes.

This thing is — the bigger and more important a solution is in the true Enterprise … the more it’s worth.

Screen Shot 2015-11-13 at 8.32.19 AM

Budgets are fixed in an absolute sense.  But they flow to the biggest and best-est solutions.  As you march up market, you also need to march “up value”.

Ask for $500,000 or $1m ACV next time, too.  (Once you’ve gotten comfortable already doubling your existing highest-end pricing).

You won’t get it for the product as it is today.  But … you might get it for where the product just might go in the future.

See where it takes you.

Maybe to $100m, and beyond, faster than you would have expected.  Or even believed.

Published on November 13, 2015
  • WOW, great thinking. Now that is what I call a real advise, not the common VC blabla (recycled thoughts from well known blogs).
    Never heard this before, so we’ll try. Thanks.

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