How Much Should I Discount For Prepaid SaaS Contracts?

data.heapanalytics.com

16 points·djug··6 comments

Ugh, popups when I'm reading, seriously?

Limiting client churn is absolutely something that should be made a priority; but, shouldn't this be done by improving the product rather than forcing a customer to continue using it?

Locking customers into a contract just postpones negative feedback. If we've done something a customer is opposed to, I'd rather know by the end of this month than at the end of the year when their contract expires and they haven't been using our product for 7 months.

At least consider 0%.

My team has an annoying monthly expense report for $5 from webscript.io that we deal with. I'd rather expense $100/year than $5 a month.

If you don't offer annual plans for a b2b offering, you're possibly leaving money on the ground.

How do most companies handle upgrading if they have users with annual plans? eg. I sign up with olark bronze plan and 3 months in I want to upgrade to gold. Now what happens? Do you create a charge for the prorated difference remaining in year?

Not the author of the post, but good question - Typically, the amount is prorated as you inferred or you just kick out to another 12 months, meaning you'd be signed up for 15 months total. I've seen both, but the former is more popular.

The issue comes in how you calculate your SaaS metrics, because the MRR/revenue upgrade is easy enough (prorated over the next 9 or 12 months in your example), but it's tricky when trying to calculate where you attribute the customer upgrade.

At least 20% (ie, $10/month and $100/year). I'm sick of monthly billing but I know a lot of people prefer it.

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