#SaaS #Enterprise #SaaSPricing #Whalehunting oft asked question: "Should we make an exception to the pupm pricing model since these are massive clients and deals?" Here is a learning tree we have from doing several 7fig contracts:

Firstly, understand that subscription pricing is helping you get to increasing gross margins on accounts over time; to gold standard of 90%+.

Second, upfront payments are help ing you build +ve cash flow at an account level; and are critical to becoming cash +ve over time.

Third, while your product is getting better and helping you get to higher pricing with each new deal, it may momentarily seem like you have margin to play. But as you grow, inefficiencies and overheads creep in. So you need to get tighter on deal level GM, not looser.

With those guiding principles, lets look at the different scenarios you usually encounter...

1. Linking it to adoption. This usually has 3 root causes
a) client has had terrible experience with past solutions
b) users are off-roll and it beats the purpose if they take on fixed costs for them
c) new category and users may not be savvy enough to consumer all features

1.a >> Insert a 3 mo "pilot" (as part of the 2-3 year contract) that is the only period they will pay upfront for initially. Boosts their confidence. Go all-in: give all features, do integrations, don't cap users. And on day 91, you switch to full contract.

1.b >> Separate the Edition. SFDC does this via "partner cloud" (for off-roll users) and "community cloud" (for consumers); they are priced at 25% to 10% of the usual PUPM. Edition may or may not feature caps; depends on your product, use case and CS strategy.

1.c >> Your base pricing itself may be wrong; build editions so you monetize as users evolve.

2. Linking it to transactions:
- bad for revenue predictability
- ensure your workflows catch 100% of transactions
- separate platform fee (stability) from transaction fee (upside)
- push for min transaction volume
- expect client to re-nego the moment volume goes up

3. Linking it to business outcomes:
- AVOID. There will be levers outside your control
- Usually business data doesn't flow back into your product; do not go for "we will give it to you on excel"
- Delayed invoicing, debates on who-did-what.. eat into CS costs and cash flow.

Given @TeamVymo helps drive sales uplift, 3 comes up all the time. We do 1a/b/c; the one time we did 2 was a mistake. Never did 3.