
Ask HN: Can I offer different prices to different users for the same product? - shoe_hn
Do any SaaS companies use &quot;Request Demo&quot; or &quot;Contact Sales&quot; to offer different prices to different customers for the exact same product? 
e.g. &quot;If customer is a startup I sell ONE license at $50 but if it&#x27;s enterprise I&#x27;ll sell ONE at $5,000 just because I know they can afford it...&quot;
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droithomme
Lots of people do this and there's nothing wrong with it, but I think it's
best to have up front pricing rather than "contact for quote".

One way to do it is have the Enterprise version have a few more features that
are unlikely to be of interest to small companies or individuals.

Another is just to say the company size on your pricing page. If your company
has 500+ employees it's $5000, if 1 person it's $50, if 2-10, it's $200, if
11-499 it's $1000 - or whatever.

Can also have per user, say $100 per user, but a single location site wide
license for $1000, or a global site license covering all branches for $20000.

Or whatever prices you like. Look around and you'll find tons of companies
offering each kinds of licensing.

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WestCoastJustin
Yes, totally. This is common practice. A tip though. If you are attempting to
connect directly with end users many folks are turned off by a "Contact Sales"
_only_ option. You should have something that is totally self serve, like try
for $50/month for a single instance, but if you need more seats please
"Contact Sales". This gets people in the door. Almost every large company that
does any type of enterprise sales will use this model of "Contact Sales" and
gets a steep discount off some list price posted publicly.

~~~
maxxxxx
That's probably the way to go. Once you hit five or six figures usually the
lawyers will get involved anyway so they can then deal with all the haggling.
But something up to high four figures I just want to be able to order it and
be done without waiting for months.

~~~
speedplane
> Once you hit five or six figures usually the lawyers will get involved
> anyway so they can then deal with all the haggling.

This is a common misconception. The lawyer haggling usually has to do with
non-monetary contract terms. Price is usually left to the business folks.

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danielvinson
IANAL, but this is exactly how B2B sales works... you offer an absurdly high
MSRP then offer discounts with various incentives based on completely
arbitrary things, with the average purchase landing nowhere near MSRP.

I'd be careful about pricing this way to consumers since states are now
started to see pricing differences as discrimination. See:
[http://nymag.com/intelligencer/2018/02/tinder-prices-
discrim...](http://nymag.com/intelligencer/2018/02/tinder-prices-discriminate-
against-old-people-in-california.html)

~~~
solarkraft
> you offer an absurdly high MSRP then offer discounts

Which is amazing. It's probably a lack of experience in B2B, but I tend to see
prices as "take it or leave it", so if I see an absurly high price I go
"Aight, that's a no", instead of trying to haggle.

It's just so inefficient having to haggle with every vendor to get real prices
for a comparison.

Is the sales process anything else than just a huge money sink?

~~~
pickle-wizard
In the B2B world, nobody pays list. I've seen some incredible discounts off
list price, especially when buying in quantity.

One time I was buying some software licenses. List price was $30/seat. We
needed 2000 seats. Which would list at $60K. By the time it was all said and
done I ended up with 3000 seats for $10K.

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maxxxxx
Most Enterprise vendors work that way but it always leaves a bad taste with
me. When given the choice I will always go with a vendor who has clear and
transparent pricing.

But realistically there is probably more money made in hiding prices and
haggling a lot. Just be aware that the sales cycle will be much longer.

~~~
blablabla123
But I think they also cater how some big companies work. They have complex
approval and compliance processes, asking there to get a service that costs
149,99$ might sound weird. Of course in that case the company might have a
separate department for buying things and they might be more used to quotes.

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blcArmadillo
Joel Spolsky wrote a pretty in-depth article about pricing which also covers
the "How Much Money Do You Have? Pricing." case which he feels is a bad
strategy: [https://www.joelonsoftware.com/2004/12/15/camels-and-
rubber-...](https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-
duckies/)

~~~
thundergolfer
Thanks for linking. Read through, and felt it was definitely worth the time.

~~~
blcArmadillo
No problem, I'm glad you found it useful :)

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vinay_ys
Speaking as someone who does lot of vendor evals and purchases, I would see it
as a structural red flag if I see prices go up as usage goes up (for a given
set of features).

Different feature slabs (basic, advanced, enterprise etc) can be priced
differently.

At any given feature slab, usual expectation is that after a certain scale,
additional usage will be billed close to cost. The premium you extracted at
lower end of the usage slab should cover your R&D costs, other overheads and
your profits. If you care to up-sell the higher feature slabs, then you can
offer a time-limited discount or trial while making it amply clear that this
is a one-time discount etc. to facilitate trial.

Having a cost+ model internally and looking at your customer mix and
competition in the market will help you price each feature x usage slab
appropriately.

Remember that customers expect prices to always go down over a period of time
(due to lowered hardware costs, better automation, depreciated/amortised
overheads etc). So, it is better to start high and go low than try to do the
other way.

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jjjjjjjjjjjjjjj
What about doing A/B testing with say $5 vs $7.5 for a product? The people who
bought it for $7.5 will feel cheated when they find out it cost someone else
$5. But at the time of purchase the product was seemingly worth $7.5 to the
customer who paid for it. Isn't it fair to pay in relation to how much you
value a product?

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ThrustVectoring
Absolutely. It's called price discrimination, and there's a whole treasure
trove of literature about it. Usually it's not the _exact_ same product,
though, but rather something like "features that enterprise users need are
extraordinarily expensive, everything else is relatively cheap". IIRC, single
sign-on is an extremely common feature to use for this price discrimination.

Lots of non-SaaS companies use price discrimination as well. The biggest
example is airlines, who will sell the same round-trip for different prices
depending on whether or not the stay includes a Saturday night. Airlines
assume that price-insensitive business travelers are generally unwilling to
spend a Saturday away from home, and charge higher prices accordingly.

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d0m
Most enterprises need a very different suite of features that take a lot of
time and $ to build. I don't think it's as cheesy as other people in this
thread try to make it sound. Often, you need to deal with a lot more
regulation, have data hosted on prem (potentially in a different country),
scale in a very different way (I.e. think of how Slack starts breaking at a
certain threshold). Risk mitigation is really different too, often startups
are way more understanding if your service goes down or has bugs.

Funny thing is when enterprise customers start asking for so many features,
you have to tell them "Sure, we can build it, but it'll cost $50k instead of
$50", and surprisingly they write you a check, so you start building those
features.

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harness_up
The fact that you're asking this question indicates that you haven't yet
figured out what your market will bear in terms of price. In ANY business the
ideal price is one that customers will question but still pay. If they don't
question, the price is too low. Keeping your pricing dark is the best way to
figure out your numbers at this stage. This is a long winded explanation but
the answer to your question is YES! You can set your price at whatever you
think the customer will bear. Be confident. If you've got a great product,
don't feel bad asking a lot of money for it.

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ThrowawayR2
They sure do but that's why businesses that hide their pricing behind "Contact
sales for a quote" are always the last option to get considered; it's like a
giant sign saying " _We 're going to gouge you as much as we can get away
with!_".

And, of course, if the customer finds out that other customers are getting
better pricing, expect them to raise hell until they get the same price or
better.

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fpalmans
In my experience, the 'Request Demo/Quote' or 'Contact Sales' is a bit more
nuanced than just price differentiation. Especially when the product is
offered by a young and/or small to mid-sized business.

First of all, building a company which can effectively sell to (and support)
businesses as well as end customers is far from easy. Unless a company has a
proven track record, I'd meet such claims with much skepticism.

Enterprise customer's expectations/requirements from a support, integration,
availability, etc. perspective are completely different than those from an
end-user. When going through those requirements, it comes down to finding the
price at which those requirements can or are willing to be met. For example,
an enterprise customer is likely to add clauses into the contract which deal
with ownership changes, bankruptcy, option to transfer to a perpetual license
(possibly with source code) in case of end-of-support, availability of
consultancy services for integration to future tools, etc.

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johngalt
Yes. It's known as 'value based' pricing.

When you see a 'contact sales' form it usually means professional sales
people. Their job is trying to determine how much you are willing to pay based
on how much you'll benefit from the product. But the pricing will not be $50
or $5000. Generally businesses aren't going to send professional sales people
chasing a sub $10k deal.

Many SaaS companies don't want to create/maintain a huge professional sales
apparatus, and/or they want to focus on getting a toe into places at
$10/month/user and gradually growing through the entire company. So instead
they try to slice the up the market based on per user costs, or making the
specific features that businesses need really expensive. Building a pricing
model that scales up quick.

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thinkingkong
I would actually suggest a learning period for pricing. Basically youre going
to iterate through several pricing models and youre not going to get it right
your first try, so embrace that and figure out the best set of prices “for
now”.

\- make sure your unit economics work; you dont lose money on a sale unless
its part of some intentional strategy (you need a pile of cash)

\- find some artificial scarcity features and at least separate your potential
customers using one of these.

\- instrument your systems (sales and revenue) so you can get good stats on
LTV, LTV:CAC, ARPA, etc.

\- after 6 months (or whenever you feel is appropriate) revisit pricing and
revise your strategy.

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cimmanom
Note that this is a valid and even necessary strategy if onboarding or hosting
or support costs are high and variable (for instance, onboarding requires
custom integration with the customer’s systems, performed by the vendor; or if
you may have to spin up a variable number of servers to support their usage
level; or for enterprise customers who may want to negotiate certain SLAs in
terms of how quickly they can reach customer support via what avenues; etc).

Like many here, as a potential customer, I find this practice frustrating,
tho.

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iloveitaly
Yes. This is very common practice for enterprise software: price on value, not
on cost, which means adjusting the price based on the user and their
particular needs and pains.

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rwieruch
Maybe it's not the thing you are looking for, after I read your question
carefully, but just wanted to mention that I do the same for customers
depending on their country with Purchasing Power Parity to adjust prices. [0]

[0] [https://github.com/rwieruch/purchasing-power-
parity](https://github.com/rwieruch/purchasing-power-parity)

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joeyj01
Every time I think about a price discrimination scenario either in SaaS,
airline tickets, or booking a hotel, I see it in government taxation on
individuals or corporations as well. If you make more, you have to pay more.
Of course, the ones who pay more have some extra perks that come with the
price.

------
WhiteMonkey
Tim Harford's Undercover Economist has examples of how to get people to self
select:

[https://www.goodreads.com/book/show/70420.The_Undercover_Eco...](https://www.goodreads.com/book/show/70420.The_Undercover_Economist)

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nyrulez
It's best to have tiered pricing - add a few things as extra to the higher
layer so there is additional value for the extra price.

Without that, I am not sure how this is sustainable unless you are in the
"disposable services" business.

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jatins
Yep, very common. Even companies with upfront pricing (like AWS) will give
custom discounts to enterprise users.

And for Startups, it's not uncommon to give discounts because sometimes you
just want the logo.

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emorisse
I recommend this book: The Strategy and Tactics of Pricing by Thomas T. Nagle
Georg Müller

Not a short or simple read, but wonderfully covers working through all of the
mechanics of creating pricing structures.

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jbillington
No this is a bad idea. Price should align with the value customers get from
the product. It needs to be defensible for many reasons but one of them is
that your customers talk to each other.

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eastbaydev
different prices to different users are foundational to the wedding industry
and airlines/hotel, just off the top of my head. When I worked in travel a
long time ago, there was a saying that if any 2 people paid the same price,
somebody did their job wrong (paraphrasing - it was a _very_ long time ago)

In both of those cases however it's very easy for the vendor to cover their
tracks. I imagine it would behoove you to do the same if you're taking a
similar tack.

~~~
shoe_hn
My concerns generally revolve around the situation where users find out
they've been charged different prices.

~~~
maxxxxx
Nothing will happen in that case other than you maybe having to adjust the
price.

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dylanpyle
Yep, plenty of companies take a bunch of inputs (your budget, expected usage,
potential revenue, how hard you negotiate..) and come up with a number based
on that.

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SteveNuts
In my experience most companies that hide their prices behind "request a
quote" start out way higher and pretty much expect you to negotiate down.

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pmlamotte
Even some consumer products do this, OkCupid charges you less for a premium
subscription if your profile states you are a woman.

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sachin18590
Doesn't seem there's anything wrong with the approach. Why would you want to
leave money on the table anyway?

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shoaibali
To answer your question as is, no - it would be dumb to have different prices
for different users for the 'same' product. If you are certain that the value
you provide is X dollars, then charge X dollars only - even if they are a 2
member team or a 1000 member team.

On the other hand - if you decide to move away from the license model, you can
charge according to seats, etc.

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joegahona
Publisher paywalls are also starting to experiment with this -- the price will
raise or lower based on the user's income or propensity to subscribe.

