How to Lock In SaaS Pricing Early

Your land and expand strategy might be killing your NRR. After 10+ years of seeing countless SaaS companies struggle with expansion revenue (guilty), I've noticed a dangerous pattern. Here are the 5 biggest lies companies tell themselves about land & expand (and how to drive meaningful expansion): 1. "We'll Figure Out Expansion Pricing Later" Horrible idea. You've just trained your customer that every new discussion is a negotiation opportunity. Your AMs/CSMs waste months re-selling what should've been pre-negotiated. Meanwhile, your expansion revenue stalls because no one wants another pricing discussion. 2. "Our CSMs Will Handle the Expansion Motion" Stop treating expansions as a pure CS play. Your sales team built the relationship, understands the broader vision, and knows how to navigate enterprise buying cycles. Throwing it over the fence to CS is like starting from scratch - with higher stakes. 3. "We Just Need More Customer Success Headcount" Wrong focus. At TestBox, nearly all our customers expanded in year 1 - not because we have an army of CSMs (we have none), but because we built expansion paths into initial contracts. Your problem isn't headcount, it's strategy. 4. "Quick Lands Lead to Quick Expands" False. Racing to close initial deals without mapping out future use cases is an expansion blocker. You'll spend the next few months trying to reconstruct buying cycles that should've been planned from day one. 5. "Discounting the Land Deal Won't Hurt Expansion" Think again. Every discount sets a precedent. When you slash prices to land, you're not just cutting initial revenue - you're compromising your entire expansion motion. —— Better approach: Instead of rushing lands and hoping for expands: - Lock in expansion pricing upfront - Keep sales teams involved post-signature - Build deployment roadmaps before signing - Align commissions across initial and expansion deals - Create clear integration/feature paths —— Land & expand isn't just a sales strategy. It's your entire GTM motion. Do it right, and you'll see 100%+ NRR. Rush it, and you'll wonder why expansions keep stalling. Learn the framework first. Design intentionally. Then execute. No shortcuts

Nothing hurts Procurement more than spiralling costs. This document shows the surging cost of software in 2025. Here's some red flags when it comes to Software as a service (Saas) contracts and what to do about it: ➡️ Auto-renewals. Negotiate for... ↳ A minimum 60-90 day written renewal notice ↳ The right to opt out or renegotiate at renewal ↳ Removal of the clause outright ☝ Prevents lock-in at inflated rates & gives you leverage at renewal ➡️ Unclear data ownership. Ensure... ↳ Explicit statement my organisation owns its data ↳ The right to export data any time, in a usable format ↳ Data destruction & sanitisation confirmation post termination ☝ Protects your IP & ensures business continuity in vendor exits. It's your data, you SHOULD own it. ➡️ True up & true down restrictions. Enable... ↳ Flexible licence adjustments without penalties ↳ No minimum user thresholds or excessive step-ups ↳ Prorated pricing for partial terms & usage ☝ Keeps your Saas aligned with actual business needs, vital in today's volatile environment. ➡️ Unreasonable yearly increases. Negotiate... ↳ Fixed pricing over the contract term ↳ A cap on any annual uplifts (pegged to CPI to keep it fair) ↳ Discounts for multi-year commitments or upfront payments ☝ Keeps your long-term costs predictable and avoids budget surprises ➡️ Uncompetitive pricing. Ensure... ↳ The right to benchmark pricing against market standards annually ↳ Most Favoured Nation (MFN) clauses, ensuring you get terms no less favourable than any comparable client ☝️Keeps your rates favourable and competitive over time ➡️ Misaligned costs versus actual use. Insist on... ↳ Clear, unambiguous definitions of billable units ↳ Grace thresholds or tolerance limits before additional fees kick in ↳ Favourable true-up terms (e.g. annual reconciliation vs monthly) ☝ Stops vendors penalising you unfairly for growth. ➡️ Unclear exit & transition clauses Build in... ↳ Vendor obligation to assist in data migration (at reasonable rates) ↳ Continued access to data for a set period post-termination (e.g. 90 days) ↳ Clear documentation detailing handover obligations ☝ Ensures a clean, controlled exit & mitigates vendor lock-in ➡️ Permanent tie in Request... ↳ A termination for convenience clause with a 30-90 day notice ↳ Pro-rata refunds for prepaid but unused services ☝ Gives you agility to pivot if business priorities change. Why should Saas treated any differently to anything else you buy? Any others to add? _______ P.S. want to know the true cost of Saas inflation to your business in 2025? Need something to convince your IT stakeholders? I've got a must read FREE 🎁 to download Saas inflation report here 👇 https://lnkd.in/eiJh_zQm Saas vendors will hate me for sharing this. Repost if you found this helpful ♻️

In many SaaS companies, founders are terrified of one thing... ... renegotiating contracts (!!). Even when margins are razor-thin. Even when costs have gone up. Even when the customer’s usage has doubled. The fear? “What if they churn?” So instead of fixing the pricing, they absorb the pain... ... quietly funding the customer’s growth. I’ve seen this happen with long-term clients: great relationships, low usage, stable MRR. But here's what happens (more often, than not) If you don’t protect your margins, you’ll eventually compromise your product quality, your team, or your sanity. There are two smart ways to handle this: 1. Structure for it upfront. >> Add an auto-renewal with an auto price escalation clause - even a modest 5-8% per year. >> That small compounding protects you from inflation, infra hikes, and scope creep. 2. Stay close to the customer pulse. >> Your Customer Success team should track sentiment long before renewal season. >> Finance should feed data on profitability and usage. >> And Legal should close the renegotiation without emotion - backed by facts. When done right, price increases don’t cause churn - surprises do. If the customer sees value, they’ll stay. If not, it’s better to find out now than bleed slowly over time. Margins are like oxygen. You can’t keep holding your breath just to keep someone happy. #Margins #SaaS #Finance #FractionalCFO #Contracting

Founders NEED to be smarter about structuring POCs. A pilot is not “prove the tech.” It’s 30 days to co-create a business case (ROI model) with your buyer. Do this: 1. Charge for the pilot. It filters tire-kickers. Be explicit: pilot fees ≠ production pricing. 2. If pushed on price before value: -Anchor to ROI: “For peers we unlock ≈ $10M; we target 1:10 ROI.” -Give ranges, not a point: “Final pricing will land between $500k–$1M depending on realized value.” 3. Build the ROI model with the buyer (during the pilot): Incremental gains: revenue lift, churn reduction, throughput, win-rates. Cost savings: headcount/time saved, license/tool consolidation. Opportunity cost: what higher-value work replaces the saved time? The Outcome? You qualify faster, negotiate on value (not features), and set up a clean path to outcome-based pricing. Save this for your next pilot. #AI #SaaS #Pricing #Monetization #GTM #VerticalAI #Founders #Sales

Your prospect won’t commit to a multi-year contract. You could back down—or you could try this: Prospect: “We’re not sure about a 3-year contract.” You: “Mind if I ask what concerns you?” Prospect: “Most of our contracts are for 1-year.” You: "If you don’t mind me asking, what worries you most about long-term contracts? Prospect: "We see the value, but it’s a big commitment and investment on our side." You: “Understood. Could I walk you through a few reasons why it might help your business?” Prospect: “Sure.” You: "1. Price lock-in You mentioned a phased rollout across your organization. With a multi-year contract, your seat price stays locked in for the entirety. That helps you budget for growth with no surprises. 2. Protection from price increases Not sure if you've seen a price increase at renewal time, but it can happen for lots of reasons—product updates, market shifts, etc... Pricing decisions are above my pay grade, but a longer term protects you from increases. So you’ll know exactly what you’re paying each year. 3. Fewer contract negotiations How many vendor contracts do you manage?” Prospect: “Around 8 to 10.” You: “That’s 8 to 10 negotiations every year—and I’m sure you know how time and resource consuming it can be for you and your procurement team.” Prospect: “yes, it’s a not the most exciting part of my job.” You: "With a longer-term contract, you can skip that hassle for a while— saving time and making life easier for your procurement team. Summary: • Lock in seat prices • Avoid potential price increases • Skip annual contract negotiations" Prospect: “That’s actually helpful. I’ll discuss it with my team and get back to you.” You: “Great. I’ll send a quick recap in writing. In the meantime, rather than go back and forth via email, can we pull up our calendars to lock time in the next couple of days once you’ve spoken to the team? I’d also recommend having your procurement lead join so we can iron things out and ensure we’re all aligned. Sound fair?” ........................................................ When objections come up, understand the why. Then tackle them as needed—(contract terms are no exception!)

Since posting our guide on how to price AI software, I've been inundated with founders looking to talk through pricing strategies for their startups. Unfortunately, most are skipping the critical first step.   They are spending lots of cycles iterating on "how" to charge (e.g., usage-based, outcome-based, hybrid, etc).   But they're neglecting the most foundational element: how much to charge. We're finding that with proper ROI frameworks, AI products are able to capture 25-50% of created value, which is significantly higher than traditional SaaS's 10-20%.   Here's how the best founders are achieving these pricing levels:   1️⃣ They bring pricing discussions into the sales conversation early   The worst thing is waiting until procurement to talk about pricing. The role of enterprise procurement departments is to minimize spend, not to assess value. They lack budget categories for 'AI that does the work of 3 people'—so they'll try to squeeze you into their existing software line items.   When prospects seem hesitant to discuss ROI upfront, don't push. Instead, propose a value audit session. Sit down with them after they've used your product for a few months and calculate ROI together based on real usage data.   I've seen founders use this brilliantly during negotiations: "I'll give you a discount, but in six months we need to do a value audit." It's a fair trade that shifts the conversation to outcomes.   Here's a bonus move: always offer outcome-based pricing even if customers don't choose it. Simply presenting it signals confidence and willingness to share risk. When positioned alongside a fixed fee, it makes the fixed fee look fair by comparison.   2️⃣ They calculate ROI holistically, not just hard savings   Most founders focus only on labor reduction or vendor spend cuts. But that leaves money on the table.   Factor in the opportunity cost of time efficiencies. Include potential implementation cost differences compared to traditional SaaS. In many cases, AI products deploy faster and cheaper, which should be reflected in your ROI calculations.   Work with buyers to agree on ROI inputs upfront. Once they've signed off on the framework, challenging the outputs becomes much harder.   3️⃣ They use the "acceptable, expensive, prohibitively expensive" technique   Rahul Vohra used this exact approach from Madhavan Ramanujam’s "Monetizing Innovation" to price Superhuman:   To gauge willingness to pay, ask three questions: 1. "What would be an acceptable price?" 2. "What would be an expensive price?" 3. "What would be a prohibitively expensive price?"   Willingness to pay typically lands near the "expensive" point.   --   I've watched too many brilliant AI founders build incredible products only to leave millions on the table by treating pricing level like an afterthought.   Don't be one of them.   P.S. The complete pricing guide (with the decision framework and tactical playbooks) is live on our website. Link is in comments.

The first price your customer sees becomes the anchor for every price after it. Most businesses get this backwards. They lead with the cheapest option because it feels safe. Low to high on the pricing page. Starter plan at the top of the proposal. Smallest package first in the pitch deck. The logic is that you ease people in and let them upgrade. But pricing works the other way. When someone sees a $120 option first, the $60 option stops feeling like a purchase and starts feeling like a bargain. The $30 option feels like stealing. You haven't changed what you sell. You changed the order in which they see it. I've watched ecommerce brands reorder a single page from high to low and see AOV climb 10-15% within weeks. No new products, no discounts, no redesign. Just a different sequence. The same principle applies to SaaS pricing pages, course tiers, agency proposals, and freelance packages. Wherever you show a price, the first number sets the frame. Here's the part most people skip: If your highest-priced option looks like it doesn't belong, anchoring works against you. A $5,000 package sitting above a bunch of $200 options doesn't set an anchor. It sets off an alarm. The customer assumes they're in the wrong place and leaves. The top option has to feel like a plausible purchase, even if most people won't buy it. The fix is simple: Sort your pricing high to low. Put the annual plan above the monthly. Open every proposal with the full package. When you send three options, put the biggest one first. Most buyers pick the middle, and the middle gets bigger when the top does. Go look at your pricing page right now. Is the first number your customer sees the one that sets the right anchor?

POV: You’re a product marketer. Pricing and packaging just landed in your lap. ❌ No pricing manager. ❌ No budget for a consultant. Just you, Google Sheets, and a vague sense that “we should probably revisit our pricing.” Common scenario at Series A/B: ✅ You’ve found product-market fit. ✅ You’ve grown fast. Now you need to unlock the next level of growth. So where do you start? First and foremost: Don’t try to fix everything. Pricing touches everything. Before you jump in, understand what you can impact. HubSpot’s Sam Lee breaks pricing into 3 key areas: 1️⃣ Product Monetization: pricing metrics, plan design, packaging. 2️⃣ Commercial Strategy: discounting, sales enablement, channel pricing. 3️⃣ Back Office: Governance, analytics, decision-making flow. I’ll add one more: 4️⃣ Pricing plumbing: tech stack from CPQ through billing. Odds are, you can safely ignore 2️⃣ through 4️⃣ (for now). You probably can’t overhaul your quote-to-cash flow, redesign your deal desk, or implement new billing software. But Product Monetization? That’s where you can move the needle. Here’s how I’d tackle it (in order): Start with packaging. Look at your current plans. For each one, ask: • Does this plan solve a distinct job? • If you were the ICP, would your tiers make sense? This alone can uncover big wins. Often, just simplifying plans can improve conversion or help your sales team tell a better story. Next, take a closer look at features. An easy approach is the value matrix. It maps each feature by: • Relative preference (how much people want it) • Willingness to pay (how much they’d pay for it) You’ll end up with: → Core features: everyone expects them, no one’s paying extra. → Value drivers: people want them and will pay for them. → Add-ons: not for everyone, but high value for a niche. The last one is where most SaaS companies leave money on the table. From there, review usage thresholds. Even if you can’t change your pricing metric (heavy lift), you can still adjust thresholds. Look at usage caps across plans: • Are they aligned with actual customer usage? Competitor research helps here. Find arbitrage opportunities where you can offer more value for the same price or better align value with consumption. Lastly, look at price points. Yes, actual prices come last. Once your packaging, features, and thresholds are dialed, you can ask: • How do we want to be positioned in the market? • Which plan should be the hero (and are we making that clear)? A 10% price bump won’t fix a confusing plan structure. But a well-designed plan can make a higher price feel like a steal. In summary: ✅ Control the controllables. ✅ Think like your customer. ✅ Reassess feature bundling. ✅ Pressure-test your thresholds. ✅ Only then play with price points. You don’t need to be a pricing expert. You just need to use your product and marketing instincts. (And maybe pretend to be your ICP for a day.)

I've repriced more than 200 B2B SaaS companies. The process can take weeks or months when you factor in validation, implementation, customer migration. But the core thinking? The part where you figure out what the new model should actually look like? That can happen in an hour if you know what to focus on. Four steps: 1️⃣ Map the jobs to be done. Ask your customers what outcome they're hiring your product to achieve. That's your packaging foundation - not your feature list. 2️⃣ Name tiers after outcomes. Each tier should describe a result, not a bundle of features. "Launch / Scale / Optimize" tells the customer something. "Starter / Pro / Enterprise" doesn't. 3️⃣ Pick a metric that scales with value. Test each candidate with three questions: can you define it in 10 seconds? Can you measure it? Does the customer want more of it? If any answer is no, move on. 4️⃣ Set anchors, then fill the table. Start with the minimum price for your smallest ICP and the maximum for your largest. Fill tiers between them - price per unit should decrease as the metric grows. The key: price the customer, not the product. Start with the outcome they want, then work backwards to the metric and the number. I put together a visual walkthrough of all four steps below. Save it for your next pricing review. 👇

I've saved companies millions on enterprise software deals. Here's the negotiation framework I developed at Microsoft, VMware & Instacart: The hard truth: Most SaaS products cost almost nothing to run. Yet I once rushed into a 3-year contract that ended up costing us double what we expected. That expensive mistake taught me something powerful about enterprise deals. Most companies have a broken process: • See a need • Pick a vendor • Rush to close • Overpay massively Here's my 5-step framework to fix this: 1. Start Early (3-6 months before renewal) Companies who begin negotiations early consistently get 5-15% better terms. This isn't just about timing - it's about leverage. When you're not rushed, you control the conversation. 2. Create Competition Never negotiate with just one vendor. Ask each competitor: "What can you offer that others can't?" This simple question reveals hidden costs and scalability issues you'd never find otherwise. 3. Focus Beyond Price The real value is in: • Service level agreements • Integration support • Training resources • Future scalability • Data ownership Pro tip: Demand performance penalties. If they won't include fee refunds for missed SLAs, that's a major red flag. 4. Master the Slow Play Never take live meetings with sales reps. Force all communication over email. Then be slow to respond. This drives sales teams crazy - especially near quarter-end. They'll often improve offers without you asking. 5. Talk to Leadership If the head of sales or CEO isn't deciding your deal, you haven't reached the best possible terms. How to get there? Say "no" frequently. Let the deal drag on. Make it appear lost to the vendor. Using this framework, I consistently negotiate: • 30-50% discounts on list prices • Better service levels • More flexible terms • Additional features at no cost The secret? Software costs almost nothing to run. Vendors depend on recurring revenue. They'll bend significantly to keep your business - if you know how to negotiate. Want to master the founder mindset and build better? Join Founder Mode link in my Bio for free weekly insights on startups, systems, and personal growth.