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Comment by pembrook | Hacker News Reader

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.

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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!

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.

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."

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.

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'.

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.

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