Enterprise Pricing
Enterprise pricing is a funny thing.
Sometimes it feels like you need to get a crowbar out to get a consumer to take money out of their wallet. Spotify is 15 million songs for $5 a month, and most of my friends are reticent about paying even that. It’s 15 million songs for chrissakes! You live in Manhattan, $5 won’t even get you half a cocktail!
Enterprises work on a different demand model entirely. Any price is justified for an enterprise customer, as long as you can prove that the benefits to revenue are greater than the additions to expenses. $250,000 for a new business software platform is trivial if it processes all of your payments - allowing you to do $5,000,000 net this year.
I have a friend at Adobe. He made an offhand comment that he was pitched on a certain service by a vendor, and the price point was $5000. “Adobe sneezes on $5000,” he said. He thought that getting purchase approval on $5000 might even be harder than getting it on $25000. “If you’re only providing Adobe $5,000 of value - well, you’re wasting our time.”
In fact, enterprise pricing is in some ways similar to luxury pricing. Price is a signal - a signal of quality and value. If you’re paying $125,000 for a software installation, well, it’s probably pretty good. $50 a month for a software installation - well, is that even worth my time?
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