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At many companies, people can expense up to $50 with minimal (no?) prior approval via providing a receipt. That's a great place to be for tools that are useful

At many companies, people can expense up to $50 with minimal (no?) prior approval via providing a receipt. That's a great place to be for tools that are useful in your job but not required. Beyond that, most companies need more documentation or prior approval from your boss (only). The upper limit for that is often $500. That means whether something is $60 or $499, it can take exactly the same effort. Above that, it often requires boss' boss' approval or a real line item in the team/department budget. The upper limit for this is all over the map, I've seen anything from $1000/month or $10k/year. Once you cross into this zone, assume customization, a more complex sales process, and you've left the realm of expense reports and moved into Purchase Orders (POs). Above there, this is starting to look like enterprise software sales which is a beast unto itself. This likely turns into competitive bidding, a dedicated sales force, custom contracts & TOS, and a lot of other things. IF you can be successful here though, you can do quite well, especially if you've figured out how to make it repeatable and scalable.

forgingahead 6y ago
This is a great comment - I would add that for the $50 price point / pricing stage, it is also low enough for an "operator" (someone using your SaaS to help their daily work) to just put their credit card in first, and then worry about claiming back from their company later. The "pinch" of buying is therefore low enough to encourage uptake. If the base price level is higher than this, then that itself becomes another mental task for the potential customer to work through before pulling the trigger. This doesn't mean you shouldn't have higher priced plans (you must!), but from my experience $50 or even $99 as the upper end of the "base" plan is a good first threshold to get prospects to be ok with putting their credit card in.
- corty 6y ago
  But with all those things, beware of the recurring expense problem: I would agree with all those cliffs, for one-time expenses. As soon as payments are recurring, things will be more complicated: Being bound to a contract beyond the current year is often subject to approval, at least when recurring payments are involved. Not yet paid but binding future obligations have to occur in various reports and need accounting involvement. Better have short contracts with autoextension or at least the possibility to pay up front for a fixed term.
  - cutemonster 6y ago
    > Better have short contracts with autoextends Does that mean monthly recurring payments? Or is that too short? did you mean yearly? > the possibility to pay up front for a fixed term What's a good fixed term, maybe one year? Or a few years?
    - corty 6y ago
      > Does that mean monthly recurring payments? Usually yearly should be fine, however, monthly would reduce customer anxiety (not sure if thats very relevant for B2B) but increase possible administrative overhead on your side. > What's a good fixed term, maybe one year? Or a few years? Longer than your usual recurring term. I'd say 2 to 5 years. The right term depends on the overall cost of that package: you should price them below the next-higher aforementioned cliff of course. If you usually offer yearly $20 contracts, and you have determined a typical cliff to be at $50, you could offer a 3year package for $49. Also consider other factors: you might not want to support a version for the whole fixed term. And you definitely don't want to sell anything perpetual or semi-perpetual.
      - cutemonster 6y ago
        Thanks for the help
cutemonster 6y ago
> prior approval from your boss (only). The upper limit for that is often $500 Is that per year or month? Or one time things? Like a lifetime software license
- caseysoftware 6y ago
  They can probably do it once or twice in a given year without having to move into the next level. If a company is particularly flexible, you can probably do it annually without much pain.

forgingahead 6y ago

This is a great comment - I would add that for the $50 price point / pricing stage, it is also low enough for an "operator" (someone using your SaaS to help their daily work) to just put their credit card in first, and then worry about claiming back from their company later. The "pinch" of buying is therefore low enough to encourage uptake. If the base price level is higher than this, then that itself becomes another mental task for the potential customer to work through before pulling the trigger. This doesn't mean you shouldn't have higher priced plans (you must!), but from my experience $50 or even $99 as the upper end of the "base" plan is a good first threshold to get prospects to be ok with putting their credit card in.

corty 6y ago
But with all those things, beware of the recurring expense problem: I would agree with all those cliffs, for one-time expenses. As soon as payments are recurring, things will be more complicated: Being bound to a contract beyond the current year is often subject to approval, at least when recurring payments are involved. Not yet paid but binding future obligations have to occur in various reports and need accounting involvement. Better have short contracts with autoextension or at least the possibility to pay up front for a fixed term.
- cutemonster 6y ago
  > Better have short contracts with autoextends Does that mean monthly recurring payments? Or is that too short? did you mean yearly? > the possibility to pay up front for a fixed term What's a good fixed term, maybe one year? Or a few years?
  - corty 6y ago
    > Does that mean monthly recurring payments? Usually yearly should be fine, however, monthly would reduce customer anxiety (not sure if thats very relevant for B2B) but increase possible administrative overhead on your side. > What's a good fixed term, maybe one year? Or a few years? Longer than your usual recurring term. I'd say 2 to 5 years. The right term depends on the overall cost of that package: you should price them below the next-higher aforementioned cliff of course. If you usually offer yearly $20 contracts, and you have determined a typical cliff to be at $50, you could offer a 3year package for $49. Also consider other factors: you might not want to support a version for the whole fixed term. And you definitely don't want to sell anything perpetual or semi-perpetual.
    - cutemonster 6y ago
      Thanks for the help

cutemonster 6y ago

> prior approval from your boss (only). The upper limit for that is often $500 Is that per year or month? Or one time things? Like a lifetime software license

caseysoftware 6y ago
They can probably do it once or twice in a given year without having to move into the next level. If a company is particularly flexible, you can probably do it annually without much pain.