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Comment by mtnGoat | Hacker News Reader

Sounds more like certain purchasing departments need to modernize, not the other way around. IMHO.

Not being able to use the right tools for the job, because some bean counters don't like complexity, is silly and shortsighted.

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As someone who works in the enterprise space, I fully agree with you.

In every enterprise I've ever worked at, the purchasing process is a nightmare - it invariably takes months at best to purchase anything, and the bureaucracy, meetings and wasted time will cost you your soul. When you add up all the wasted man-hours it takes to purchase a $100 app, it will easily run to an order of magnitude more - at best.

Once you've been through the purchasing grinder once, you will do just about anything to avoid purchasing anything every again.

So no dammit, the vendors don't need to change - the bureaucracy-ladel, rule-ridden, time-wasting purchasing departments need to!

This is why any smart Saas company is charging, at minimum, thousands of dollars per month for medium-large sized customers.

They know the purchasing process will be the same headache regardless of whether the product costs $100/month or $10,000/month.

If the company is large and the tool enables collaboration and time-saving, $10,000 is literally a rounding error for a company with 500+ employees in comparison to the potential value delivered.

When I see B2B Saas companies with pricing plans that top out at $50/month, I want to pull my hair out. They are leaving so much money at the table and simultaneously starving themselves of the revenue needed to grow and build a long-term business.

I agree. Incredibly though, the same organisations will spend hundreds of man-hours quibbling over whether a dev team really needs a $20 app.

Sometimes I really hate working for large companies!

Me: "John wants to use this $20 app"

Manager: "Ok, schedule a meeting with the 3 of us and my boss to determine if it makes sense"

Me: "The 4 of us talking about this for a half hour will cost the company $375."

Manager: "..."

[cut to inside the $375 meeting]

Manager's Manager: "Things are tight, we just don't have the budget this year."

This is exactly why sensible companies have discretionary budgets at every level, ideally including individual employees. Below a certain threshold, it costs more to review than to just trust that people are asking for a reason; as long as there are controls and records in place to catch potential abuse or mistakes (e.g. paying for the same thing multiple times), approval requirements should be proportional to amount. On the off chance someone is being frivolous, it's still not worth imposing painful review processes on everyone.

An individual employee at a technical company should be able to spend $100-200/year with discretion (mouse, keyboard, utility program, cheap service, etc). (That's not counting whatever the company might allocate for people to get their own development systems, which some companies do.) A first-line manager should be able to approve more than that (e.g. a monitor, a more substantive service).

Ofc you can buy it from the tiny discretionary budget. But to get to officially use it you will still have to get approval from IT, a process that will make the purchase shenanigans pale in comparison.

So every department builds up a hidden account and 'shadow IT'...

And atop each 'shadow IT' dept, is a 'shadow CIO'.

In reality that would only be the first of several meetings. It might be funny if it wasn't true.

I recall a couple of years back I was trying to purchase a POEditor subscription, which is $14/m. This was for a large dev project where the customer was paying us around $10M. After several meetings encompassing a ridiculous number of people, many of whom weren't related to the project in any way, I added up the costs and showed the PM: it was well into 5 figures, not accounting for loss of productive time for our customer. The PM just shrugged, "that's the way it works, they won't change".

If that is $20/year app, even if they finally approve it, expect to have this debate over and over again each year whenever the management gets another $20 invoice.

Then there is another piece of software that costs $200,000 but that's okay because someone more important than John decided they need it. Probably some website where you can upload PowerPoint presentations.

I’ve come to the realization as a leader that I just do not have the skin for budget discussions of any form or variety beyond negotiating with potential hires what they would like to be paid.

And what you just said about $20 apps is 100% why.

I think it’s probably if not the entire reason, then part of a factor of having less power and influence in the former (Though being expected to be answerable in full for “why did cost x go up?”), and measurably more in the latter-personal history has born this out with a predictable consistency.

Ask me to do the math, I will happily and eagerly get to work. Ask me to sit on a budget call and deal with the politics of who gets how many beans and I want to throw myself out a top floor window.

This is so true. I've seen some companies however who allow end user teams to spend a certain budget using their corporate credit cards. But nowadays IT security and privacy restrictions anyway make every damn purchase a 8 month project at least

I'm fortunate to work in an "enterprise" environment where managers have discretionary spending ability. A $50/month app doesn't require the huge purchasing process, just throw it on a company card and tell accounting what code to charge it to. Once you go over a certain threshold, the heavyweight purchasing process kicks in - but it's more justified when the dollar amounts are higher.

What's your company? I want to sell to you.

So true. I wouldn't even try to sell an enterprise to-do app for less than 2000/month. The headaches of selling are baked in no matter what you are building.

I agree with you in principle, but they're not going to reform because reform is in they eye of the beholder. For them everything is fine. They don't care how many gray hairs it costs you.

Given that, it seems to me wise to look for ways to make purchasing less nightmarish without needing to reform several thousand large bureaucracies.

Even in the "happy path" where vendors accept POs, 30-day credit terms etc, the purchasing process is still a nightmare, even if it's less so than for card payments. And it's not "just" about stressing out those that interact with the purchasing process - big organisations waste a lot of otherwise productive hours, affecting their bottom line.

When I consider the vast sums of money wasted by the purchasing bureaucracy where I work, it boggles the mind.

Everyone knows it, but inertia and fear of change are rampant in large organisations.

Honestly, as someone also currently inside a v. large bureaucracy, I concur. Sometimes it almost feels as if half of the "value" or "work" in selling to big businesses that I hear of is in navigating the purchasing departments. Once you've done that, you're golden. It's like picking the lock on a safe.

Unfortunately legal concerns about data privacy are pushing enterprises towards MORE of this stuff, not less.

Absolutely. And it is strictly security theater. We're delusional to think that checking the boxes on these arbitrary lists is making us "more secure." It's very frustrating to have a role in this game and find yourself completely unable to combat the bureaucracy.

This is so true. And big corporations push around smaller vendors to have so many compliances, insurance and other certifications in place, whereas larger vendors can get away with insane security and privacy lapses just because of legacy. Makes me mad.

That's pretty much not going to happen. That said, what you can do is:

- Provide a plan that fit within common purchasing card limits/tiers, to enable those who want to bypass the internal controls of their purchasing department and just slip it in on an expense report and be done with it.

- Provide a plan that adds several zeros, to make it worth the hassle when you get a customer that does try to go through the official purchasing department process. This will entail contract reviews, security/compliance certifications/audits, invoicing hassles, ongoing support requests (you will get lots of emails, even for things that could trivially be self-serviced by the client), etc. You'll be sinking lots of labor into this process regardless of the price tag, so make it worth it.

"common purchasing card limits/tiers"

Strongly agree with you although what "common" means here is tricky.

I imagine "common" in Local Government is different from tech giants ... and geography brings another whole dimension into it.

Less of a problem if your product is strongly focused on one country and one industry.

"Provide a plan that adds several zeros"

I think this is ideal but I've noticed that this isn't generally how it's done. The third tier of pricing is generally "Talk to us" and the first part of "Talk to us" is the supplier working out how much they can get and so requires the sort of sales management skills which many tech startups don't have.

In passing there's a lot of sense about pricing in https://www.joelonsoftware.com/2004/12/15/camels-and-rubber-...

> Strongly agree with you although what "common" means here is tricky.

Ha, true! I've never seen it done, but someone should really A/B test adding a "Expensing this product for work? Reach out for a custom payment plan that fits your needs!" message if their product is popular with a business crowd.

> is the supplier working out how much they can get and so requires the sort of sales management skills which many tech startups don't have.

So this is sometimes the case, but not always.

Is the standard plan enough for you, but you require us to invoice your AP department for payment? Or you a second login for IT with access to the login/audit logs, but otherwise don't need any "enterprise" features?

You can likely get it close to the listed rate, with a minor premium for the additional effort.

Will you be a high volume user, but capable of being self-sufficient with the self-service tooling? You can get tiered pricing based off of usage, no account manager, and a fixed rate for engineering time if you need any custom support.

Will you be a massive pain - requiring an in-depth security audit, require us to agree to potentially costly-to-comply-with contractual clauses, need an account person to do every little thing for you (plus constantly (re)train your staff/agency's staff), require a generous amount of engineering time baked into the contract, and split out the agreement between a base MSA and incremental SOWs for each actual usage internally? Your pricing is no longer based on the actual product itself, but on the uncertain but potentially massive amount of labor that's going to be required to support your account.

So "Talk to us" is as much the supplier trying to figure out specifically what sort of customer you are and what your needs are (and how much you'll ultimately going to cost them), as it is working out the pricing to go with that. Which is why you don't generally see an actual listed rate with several zeros added, because that is honestly only one of the potential outcomes and "Talk to us" leaves open capturing the other outcomes as well.

I've also had success using the "Talk to us" to get lower than list rates. Sometimes because my needs are such a tiny fraction of the intended usage of the plan with a list rate. Sometimes because I work for a company that does $10bn a year in revenue, and the company is hopeful that my usage of the tool will potentially domino into other users internally seeking it out. You're right in that many tech startups don't have a high level of sales management skills from the get go, but only the very last example above really requires true sales effort. The rest are just very low pressure sales needs that require minimal if any incremental effort to support, but just happen to not fit cleanly in the pre-defined plan templates you have listed.

Yeah, telling your customers that they should modernize is a great way to let someone else sell to them.

OTOH, telling an entire industry to reorganize to accommodate your internal processes is also a fools errand. Just imagine the dilemma this puts on the growth team: "Hmm, spend 1000x effort to land this one customer or fix an obscure bug in the signup page and get an extra 1000 self-serve customers this month. Golly, I don't know..."

Seriously, though, GP is correct. Small companies that can adapt and snag these contracts won't push for change because they have a "competitive" advantage, and the businesses they sell to won't change because it's too painful for them. The whole industry isn't being asked to change, small B2B software houses will just keep ticking along, navigating the maze of purchasing to live high on the hog.

The industry has the choice of changing or ever racing ahead of AWS, who can take their potential customers merely by already being in the purchasing database.

This is true, but truly the customer's own benefits are being compromised here. They can obtain better effectiveness at lower prices and push their margins, but procurement policy is not something companies want to mess with too much. It's also how they apply the same procurement policies to equipment purchases and software subscriptions. Some of those forms I don't even have a clue how to answer since it's so irrelevant.

If the means don't justify the ends, let my competition sell to them... Then it will be adding to their failure, not mine.

I do agree with your sentiment though, asking the customer to change is an uphill battle. I have customers with lots of custom billing situations, I loathe then all.

I've never heard a better plan for failure. "Hey $10B company, I'm gonna need you to modernize your purchasing department before we go any further."

I don't think it's a plan for failure at all. I think it's entirely within Atlassian's rights to consider these customers to be more trouble than they're worth and pursue customers who don't have such braindead internal processes.

I guess it's intentional failure. I agree you don't have to accept every customer.

Imagine that the company is paying 25% extra because of these policies.

Our app costs $18 per month and one of our customers said she could buy only using a PO. So, I told her to use it for free till she finds a way to pay by card. We are likely to gain more by having an enthusiastic user, rather than losing her for the stupid purchasing department.

So sell her an enterprise subscription for $2500/year, with up to 10 logins, and take the PO. Now you have a year to figure out how to make that routine.

Eventually, we should be able to do that. But, that would get into a long approval process right now.

Right now, you're getting 0 from the sale. You can afford to let them take months to pay you.

We have 800+ small businesses as customers. This one is from a large company who don't come in as inbound lead. Don't you think it is better to understand how to work with them rather than hitting a wall with their purchasing department?

Could you just set up a recurring invoice via Stripe so that she doesn't feel like a freeloader?

She said she needs a PO.

Or sell her a lifetime plan of size x that justifies the hassle of dealing with a PO.

This is so true. The sheer administrative/legal effort and expense it takes smaller enterprise software vendors to execute a single sale is crazy. I'd happily offer lower prices if the process was easier.

i pay for a $20/mth saas from my own cc n claim afterwards because they dont issue POs and finance doesnt have a cc.

one day I'll be late with the payments a few times so that we can start the discussion with some other vendor that will charge >100x but can issue POs.

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