Pricing an early-stage enterprise product

Early stage pricing question (asking for a port co): It's a B2B Enterprise (cloud) company, planning to launch beta in a month or so. They are currently still iterating on pricing but are trying to figure out the importance of nailing down pricing now vs. "cross that bridge when they come to it". Some of their considerations are whether to negotiate beta pricing with each paid beta user, or decide on a fixed (symbolic) price for all. Furthermore, the question of how important it is to nail down "standard" (post-beta) pricing with deep market landscape research and analysis, vs. just moving quickly, experimenting and growing, then worrying about price later.
  • Sibi Murugesan: We’d definitely say the latter (move faster, iterate with feedback from users). Pricing is a function of value so spending all of the time to get it “right” usually results in a waste of time when you could be shipping product (at least in our experiences)
  • Parasvil Patel: Depends on the sales motion. If it is a truly enterprise sale i.e. negotiated by a sales person, you can continue iterating and get better feedback as Sibi mentioned. If they are taking a product led growth approach where customers can start using the product directly, you might need to have a basic structure and pricing list in place. A couple of other best practices to keep in mind: Pricing structure (what variable to decide the pricing on – usage, feature buckets, etc.) is a more important decision than the actual price. It is difficult to change the structure on a customer once they have agreed to something else. It is easier to change the list price. Similarly, you can always start with a higher price and discount down. Raising prices is almost always more difficult. Note: this is more relevant in enterprise sales motions where you have the ability to negotiate the price and discount down to not lose the deal based on customer feedback. Less relevant for situations where customers sign up directly on the website.

Read More