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Selling SaaS is as much about smart pricing as it is about a great product. Yet sales teams often push narratives that sound convincing but can quietly sabotage your pricing strategy. In high-growth SaaS, taking pricing advice at face value from the field can hurt your revenue, customer loyalty, and valuation.
Below we expose 11 common “lies” sales teams tell about pricing - and the evidence-backed truth behind each one. Let’s get you a provocative, data-driven reality check on your pricing approach. Each section concludes with a concrete takeaway to keep your pricing strategy on track (and your sales team honest).
1. “We need big discounts to close deals.” (The Discounting Trap)
The Lie: Sales reps insist that without hefty discounts (20%, 30%, even 50% off list price), they’ll lose deals. The logic: lower price = less friction = faster closes. It’s a tempting short-term play, especially at the end of quarter when reps are desperate to hit quota.
The Truth: Deep discounts often hurt more than they help. Aggressive discounting can backfire by attracting the wrong customers and even slowing down deal cycles.
A study by SaaS proposals found very high discounts don’t lead to faster decisions - they actually correlated with longer sales cycles. Deals with minimal discounts (under 5%) closed nearly 2x faster on average than those with 30-40% off. Why? Huge discounts signal desperation or low value, prompting prospects to seek approval from higher-ups or shop around.
Even if a big discount lands the customer, you may regret it. Heavily discounted customers tend to be less committed and more likely to churn. In fact, Sameer Sinha, Head of Product at Visdum, ex-Oracle states that SaaS customers won via >20% discounts, churn 3x more and deliver 30%+ lower LTV (lifetime value) than full-price customers. In other words, you “buy” the logo now but pay the price later in lost renewals and upsells.
To put it, a “discount-happy business” can train the market to see your product as a commodity and negotiate harder next time. Instead of a value-driven partnership, the relationship becomes a bargain hunt - not what you want in B2B SaaS.
Takeaway: Set disciplined discount guardrails. Don’t let every deal become a race to the bottom. Moderate, targeted discounts (e.g. 5-15%) can help win business without devaluing it. Train your sales team to sell on ROI and product impact, not price alone.
As a rule of thumb, if more than ~20% of deals are coming in with steep discounts, it’s time to tighten up. By preserving your pricing integrity, you’ll attract customers who stick around for your value - not your clearance sales.
2. “We have to match our competitor’s price (or we’ll lose).”
The Lie: “Our competitor offers a similar product for $X - we need to price at $X or a bit less, or no one will buy us.” Sales teams often push this argument when prospects bring up competitors. It assumes pricing is the only deciding factor and that copying the market leader is the safe play.
The Truth: Copying a competitor’s price is risky and usually wrong for your business. You’re basing your pricing on someone else’s context and strategy, which may not fit your product or customers at all. What if the competitor simply set a suboptimal price or copied someone else? Chasing them down can become a dog chasing its tail. A quarter of SaaS companies today admit they mimic competitors’ pricing. Don’t be part of that herd.
Using competitors as a reference is fine, but outright copying indicates to the market that your product is just “me too.” It undermines your unique value, as said by OpenView pricing experts. If your solution truly has an edge, your pricing should reflect that differentiation, not just mirror the guy next door.
Takeaway: Price for your value, not your competitor’s. Do competitor research, but don’t let it dictate your pricing blindly. If your product delivers more value to a certain segment, charge for it - customers will pay if you can prove ROI. And, if you have a differentiated niche or feature set, you might sustain a higher price than a one-size-fits-all competitor.
Focus on your own target customer’s willingness to pay and the unique problems you solve. In practice, this means running independent pricing analyses (surveys, interviews, experiments) and positioning against competitors on value, not just price. As a result, you send a message that your product is not a commodity and you avoid margin-eroding price wars that nobody wins.
3. “If customers aren’t complaining about price, it means our pricing is fine.”
The Lie: Silence is golden, right? Sales might say, “Look, hardly any prospects or customers say our price is too high - so we must have nailed our pricing!” It’s the assumption that no news is good news: no pushback means the price is in the right zone.
The Truth: In SaaS pricing, no pushback could actually be a red flag. If no one ever thinks your price is a bit high, you’re probably underpriced.
As the old pricing adage goes, “If nobody balks at your prices, you’re probably too cheap.” You might be leaving a pretty good amount of money on the table. Think about it: for any product with a range of customer types, an optimal price usually elicits some resistance from price-sensitive folks (who may not be your best-fit customers anyway) while still being accepted by those who truly value your solution. If 100% of buyers say “yes, that was super affordable” - you likely could charge more until at least a few percent start saying “it’s a bit pricey, but worth it.”
In fact, experienced founders and VCs often look for some level of price complaints as a healthy sign. One rule of thumb: about 10-20% of serious prospects should say your product is “expensive” (yet still buyable) if you’re near the optimal price. If no one ever objects, you’ve likely priced too low and captured only a fraction of the value you create. This is especially true in B2B SaaS, where buyers expect negotiation - if they’re all immediately signing without a peep, you aimed too low.
Low or no pushback could also mean you’re attracting an overly price-sensitive customer base because your price is set for bargain hunters. These may churn when prices increase or when a cheaper alternative appears. A healthier strategy is to charge a value-based price that may turn away the extreme bargain shoppers but attracts customers who appreciate your product’s impact. They’ll stick around longer and be more profitable. Remember, your goal isn’t to avoid all friction - it’s to maximize value capture while delivering ROI. Sometimes a little friction is a sign of value.
Takeaway: Don’t equate silence with success. Regularly test price increases, especially if you haven’t heard objections in a while. Many SaaS leaders run pricing experiments on new customers (e.g. A/B test a higher rate or package) to gauge elasticity. If those prospects still convert well, that’s a strong signal you can raise list prices for all new deals. Also, actively solicit feedback on pricing in customer surveys - you might learn that customers expected to pay more, or that certain features are undervalued. In short, embrace a mindset of continuous price optimization. Complacency (“no one complains, all good”) can cause you to miss revenue opportunities and erode your positioning over time.
4. “We shouldn’t raise prices - existing customers will freak out.”
The Lie: Sales (and sometimes customer success) will caution, “Any price increase will anger our customers and cause churn. Better to keep prices flat forever (or even drop them) than risk a backlash.” It’s a fear-driven stance: assume customers are extremely price-sensitive and that loyalty is fragile.
The Truth: While nobody likes paying more, the reality is modest price increases are often expected and manageable when done right. A 2023 survey by OpenView Partners, showed 94% of B2B SaaS companies change their pricing or packaging at least annually, and ~40% do so quarterly. Why? Because SaaS products improve over time, and external factors (inflation, added value, new modules) justify charging more.
Customers know this. In enterprise SaaS, it’s become normal to see small annual uplifts or new package structures every so often. 73% of SaaS providers raised prices in the past year, with an average increase of ~12%. Even giants like Microsoft, Salesforce, and Google have rolled out price hikes recently, usually with minimal drama as long as they communicate value. Salesforce, for example, bakes in a ~7% yearly price increase into many contracts - and customers still renew, because the product’s value to their business grows and switching costs are high. Salesforce knows that a reasonable increase won’t drive away a happy customer (and they use it as leverage for multi-year deals, see Lie #11).
The key is how you raise prices. If you suddenly double the cost with no warning or added benefit, expect anger. But operationally grounded SaaS companies follow best practices to manage increases smoothly: grandfathering legacy customers for a period, adding new value (features or usage) alongside the hike, and communicating clearly why prices are going up - whether it’s improved product, continued innovation, or inflationary adjustments.
Many SaaS firms find that when handled professionally, price updates cause only a small fraction of churn - often near-zero for single-digit % increases. In fact, not raising prices can be worse: you might under-fund your product roadmap or signal that your product isn’t improving (if it were, why wouldn’t it be worth more over time?).
Takeaway: Don’t freeze your pricing - iterate it. SaaS leaders should review pricing at least annually. If you’ve added significant value or your pricing is out-of-step with the market, plan a structured price update. Do it thoughtfully: validate with a few key customers or through research, communicate well in advance (focus on the added value and that it enables continued product investment), and consider grandfathering or phased increases for long-time customers to ease the transition.
The result can be higher ARPU and revenue growth without meaningful churn impact - a net win. In 2024’s market, nearly three-quarters of SaaS companies are raising prices, so you won’t be an outlier. Just execute price changes with the same customer-centric mindset you apply to product changes, and you’ll be surprised how smoothly it can go.
(Bonus: Proactively managing pricing changes is actually part of Monetizely’s Step 5: Pricing Operations. Top companies treat pricing as a continual process, not a one-and-done decision.)
5. “Every enterprise deal is unique - we should bend our pricing for each big customer.”
The Lie: Enterprise sales reps often argue that “no two large customers are the same.” They push for extreme flexibility: custom pricing for each large deal, bespoke bundles, one-off discounts, special contract terms galore. The mentality is that to win whale accounts, you must tailor everything - essentially throw out your standard price list if needed.
The Truth: Yes, enterprise deals are often complex, but allowing uncontrolled custom pricing for each customer is a recipe for chaos. If every rep negotiates their own flavor of pricing, you’ll end up with an inconsistent mess that confuses customers and wreaks havoc on your SaaS economics. While some customization is warranted in enterprise sales, you should enforce a structured approach (tiers, discount bands, deal desk approvals) rather than reinventing pricing from scratch each time.
Why not give each enterprise whatever pricing they want?
For one, it doesn’t scale. Negotiating special pricing for every customer will bog down your sales cycle and make it impossible to forecast revenue or understand your pricing effectiveness - you have no consistent baseline. There’s a reason mature SaaS companies implement CPQ (Configure Price Quote) systems and deal desks: to manage this balance between customization and standardization. You might allow, say, up to 20% discount for annual deals or bundle add-ons at predefined rates - but that flexibility still lives within a defined model.
Furthermore, extreme custom deals can backfire with customers. If they later discover another client paying less, trust erodes. Or internally, your success team struggles to manage accounts because each has different entitlements and terms. Remember, big enterprises actually expect a standardized menu to some degree - they want to know you have other enterprise customers and a rationale behind your pricing. If every deal is wildly different, it signals immaturity.
Look at cloud providers: even though they do huge custom contracts, they still use consistent frameworks (e.g. committed spend tiers, volume discounts according to a published schedule). They rarely do totally bespoke pricing. Why? Because they handle thousands of enterprise customers and need fairness and consistency. You should strive for the same principle at your stage.
Takeaway: Customize wisely, within guardrails. Define a tiered pricing structure (e.g. packages like Standard, Premium, Enterprise) and volume discount guidelines that give sales some flexibility without deviating from a core pricing model. Implement a deal desk or approval process for exceptions above a certain threshold. This way, your sales team can address unique needs (maybe a custom feature bundle or a discount for a multi-year commitment) but always in a controlled, reviewed manner. The result: you maintain pricing integrity and margin, and avoid a Frankenstein price book that you’ll later have to untangle. Operationalizing pricing this way actually empowers you to close big deals and sleep at night knowing you didn’t give away the farm to do it.
6. “Let’s price super low (or free) now to grab market share - we’ll upsell later.”
The Lie: Especially in early-stage SaaS, sales might advocate a land-grab strategy: “Our priority is logos and user base. We’ll set a bargain-basement price (or give a lot away for free), sign up everyone, then figure out monetization or upsells down the road.” The underlying lie is that you can always raise prices or monetize those customers later once you’ve hooked them.
The Truth: Winning users at all costs and monetizing “later” is a risky gamble - one that often fails. Sure, you need market share, but if you delay real monetization too long, you may never get the chance to do it properly. In fact, founders who focus only on user growth while neglecting pricing discipline often run into serious trouble. A survey by First Round Capital found that among startups that struggled to raise follow-on funding, they were 3x more likely to admit they monetized too late and 2x more likely to say they picked the wrong business model. In other words, an overly delayed or flawed monetization strategy can sink the business just as surely as slow user growth.
Underpricing your product severely can also attract the wrong customers (you will read about this later in the blog under Lie #10 on bad-fit customers).
If you give your product away nearly free, you might get a lot of signups - but are they your target persona who sees true value in your solution, or just tire-kickers drawn by the low price? When you eventually try to “upsell later,” these bargain-hunters may churn out or balk at paying a higher price. You’ve essentially seeded your user base with people who don’t value the product enough to pay for it. This can create a churn nightmare and negative word-of-mouth when you do raise prices (“XYZ SaaS was free, now they want $$$ - I’m leaving”). We saw this play out during the 2020-2021 boom: many SaaS companies offered generous free tiers or one-time discounts to drive adoption, only to find those users unwilling to convert to paid plans at sustainable rates in 2022.
Now consider the opportunity cost as well: every customer that comes in far below fair value is revenue you’ve left on the table and a customer who won’t contribute the dollars you need to grow and improve the product. Sure, you can upsell features or usage, but if your starting point is near zero, you have a long climb to profitability with each account. Many SaaS businesses have crashed by undercharging early and not being able to finance their growth (or prove a viable business model) before the cash ran out. Venture capital sentiment has also shifted - investors now want to see a path to healthy unit economics, not just growth fueled by artificially low prices.
None of this is to say you should never use land-and-expand or a low entry price strategy - those can work if done deliberately (e.g. a low-cost tier that naturally upgrades as usage grows). The lie is thinking you can ignore pricing strategy now and simply fix it later without consequences.
Takeaway: Pursue growth and monetization in parallel. By all means, use tactics like free trials, freemium for a limited product version, or discounted introductory offers to reduce friction - but design them with a clear path to sustainable pricing. Set expectations with early customers that prices will increase as the product delivers more value (or as initial promo periods end). Validate willingness-to-pay now, not “someday”: even if you start with a low price, talk to users about what they’d pay as you add functionality. Ensure your pricing model scales (e.g. usage-based or tiered pricing that naturally increases as the customer gains more value). In short, land customers with value, not just cheapness.
The best SaaS companies find a balance - they might not charge the absolute maximum on Day 1, but they also don’t give the product away with no plan. Every deal should have an eye on the lifetime value, not just the initial logo acquisition. Remember, a user you never convert to a healthy ARR isn’t an asset; it’s a cost.
7. “One price should fit all - keep it simple for everyone.”
The Lie: Simplicity is great, but some sales teams take this too far, urging a one-size-fits-all pricing model. “Let’s have a single pricing plan (or just one or two) that all customers use. If we segment pricing, we’ll confuse people or complicate our sales.” The lie is that uniform pricing across all customer types is the best way to avoid complexity and friction.
The Truth: Simplicity is important, but over-simplifying by ignoring customer differences is a huge mistake. All customers are not equal - a 10-person startup and a Fortune 500 enterprise have wildly different budgets and needs. The best SaaS companies segment their pricing to capture more value from big customers while still serving smaller ones.
In fact, “SaaS pricing isn’t one-size-fits-all. What works for a $100/month self-serve plan can break down for a $100k enterprise deal, and vice versa. Enterprise and SMB customers have different budgets, needs, and buying habits. The best companies adjust pricing to fit these differences instead of using a generic approach.” If you try a single flat price or one-tier model for everyone, you either end up undercharging large clients or overcharging small ones - or both.
Enterprise-focused pricing might include volume-based discounts, advanced security/compliance features in a higher tier, and custom negotiations for very large deployments. SMB pricing, on the other hand, might be a transparent monthly fee, lower entry price, and self-service purchase flow. These differences are operationally necessary. Enterprise buyers have bigger budgets and demand clear ROI, whereas SMBs are much more price-sensitive and need a lower entry point. Trying to force one scheme on both will either scare away SMBs or shortchange your enterprise revenue.
Some founders worry that having multiple pricing tiers or bespoke enterprise pricing will confuse customers. But in reality, as long as you clearly communicate the options (and they map to real differences in usage or features), customers appreciate being in the appropriate bucket. No SMB expects an unlimited enterprise plan; no enterprise expects the cheapest self-serve deal to meet all their complex needs.
Takeaway: Segment your pricing to match your customer segments. This could mean offering a low-cost self-service tier for small customers, a mid-tier for growing ones, and high-touch pricing for enterprise deals. It might also mean regional pricing differences or industry-specific packages if value differs greatly by vertical.
Use your customer and market research (Monetizely’s Step 1: Segmentation) to identify who your customer groups are and how their willingness-to-pay diverges. Then design pricing packages or schemas that capture more value where it exists. The result will be a pricing strategy that’s both easy to understand and fair across your customer spectrum. You’ll maximize revenue and not leave your best customers undervalued. Just keep the structure logical - for example, increasing limits or features as prices go up - so it’s clear and not overly convoluted. In short, simple where possible, but not simpler than appropriate.
8. “Include that feature (or drop the price) to make them happy - we can give it away.”
The Lie: Sales reps, eager to close a deal, often say: “The prospect is balking - what if we throw in Feature X for free? What if we just bundle our premium module into the base plan? It’ll make them happy and it doesn’t really cost us anything.” This lie assumes that giving more value for free is always a positive - that over-delivering will only help win and keep the customer, with no downsides.
The Truth: Overloading customers with free extras can backfire. When you do heavy discounting or give away features that don’t fit the customer’s real needs, you risk creating “shelfware”- features the customer never uses. Not only do you lose revenue (the customer might have paid separately for those features), but you also risk hurting customer retention. Customers may question why they’re paying for features they don’t use, leading to doubts about overall value and potential cancellations. By over-generosity up front, you deprive yourself of future upsell opportunities and devalue your premium capabilities.
Additionally, from a product perspective, promising features for free can place a strain on your engineering and support teams. When sales go around your standard offerings, it creates operational inefficiencies that make it harder to deliver quality, sustainable value.
Instead of giving in to every request for free features or discounts, consider walking away from bad-fit deals. If a customer is only interested in the discount or freebies, they might not be a profitable client in the long term. It’s better to negotiate based on value and make the customer see why the premium package is worth the investment.
Takeaway: Stick to value-based packaging. Don’t reflexively throw in extras or discounts every time a prospect pushes - ensure every feature or service you provide has a purpose and a price. This doesn’t mean you never make exceptions, but treat them as, well, exceptions - done rarely and with careful consideration of the precedent it sets. A good practice is to empower a deal desk or pricing committee to approve non-standard concessions, rather than letting reps decide in the moment. Often, just this hurdle causes sales to negotiate harder on value before giving in.
9. “Our pricing metric should be whatever is easiest to sell - value metric doesn’t matter.”
The Lie: This one is subtle. Sales might say, “Look, let’s just price per user (seat) or per license like everyone else. Customers understand that. All this talk of pricing metrics - usage, API calls, data volume - will confuse buyers.” The lie is that the choice of pricing metric (the unit by which you charge) is unimportant, and you should default to the simplest or industry-standard metric without considering if it aligns to value. In some cases, the sales team may resist a new pricing model (like usage-based pricing) because it’s a change from what they know.
The Truth: Choosing the right pricing metric is critical - arguably as important as the price level itself. A mismatched metric can stifle your growth and customer value, even if the “number” on the price tag seems reasonable. You want a metric that scales with the customer’s achieved value. If you pick something too far off, you’ll either frustrate customers or throttle your own expansion.
Let’s run you down through an example of Mixpanel. The company originally charged per data point (event) tracked. This was simple technically, but it turned out to discourage customers from tracking all the events they actually cared about (because more events = higher bill). Mixpanel discovered customers were omitting valuable data just to control costs, meaning they weren’t getting the full insight the product could offer. In their own words, “our pricing (by events) was stopping companies from seeing a complete view of user behavior - which is one of the main ways they get value... obviously not ideal.” Mixpanel ultimately switched to a different metric (monthly tracked users) that aligned better with value and removed the disincentive to use the product fully.
On the flip side, using the right value metric can unlock growth. Many SaaS companies have moved to usage-based or hybrid models because it aligns price with actual consumption and value. According to Bain & Co research, 80% of customers report that consumption-based pricing (paying based on use) better aligns price to the value they receive. And two-thirds of companies using it have seen revenue increase with existing customers, thanks to upsell on usage. In other words, pick a metric that grows as the customer’s usage and success grows, and you naturally get net retention (expansion revenue) without a hard sell - the model itself expands accounts.
Of course, there’s no one-size-fits-all. The wrong value metric can kill deals if it doesn’t fit how customers budget or think. (For instance, try charging HR software by “number of logins” - HR buyers don’t value logins, they value employees served or outcomes.) Sales teams sometimes resist innovative pricing metrics because it’s easier for them to sell what buyers are used to (like per-seat). But consider: if every competitor prices per seat and you instead price per transaction (and customers’ spend correlates more with transactions), you might offer a more compelling ROI story. Yes, it requires educating the customer, but it could set you apart. Don’t let sales’ fear of a new sales pitch override what’s best long-term.
Takeaway: Align price units with value units. Don’t default to what everyone else does if it’s not a good fit. You can refer to our Step 3 (Pricing Metric) from our pricing framework. Once you have the right metric, it will actually make selling easier in the long run - because customers will intuitively feel that your pricing is fair and grows only as they get more value. That means less haggling and more “win-win” expansion revenue. Don’t be afraid to iterate here: if your current pricing metric is cited in churn reasons or sales objections frequently (“we hate that we pay per user, since only a few users actually use it heavily”), that’s a signal to revisit the model. The bottom line: pricing model innovation can be a huge competitive advantage - don’t let inertia or fear stop you from finding the best alignment of price and value.
10. “Any customer is a good customer - the more logos, the better.”
The Lie: Sales, especially under pressure, will say “We should sign every customer we can. There’s no such thing as a bad customer. Revenue is revenue, and a logo is a logo.” This lie promotes the idea that you should pursue and close deals even with customers who are a poor fit for the product or who demand unreasonable concessions - because short-term, it adds to ARR.
The Truth: Chasing every logo is a trap. In SaaS, bad-fit customers can be worse than no customer at all. They churn quickly, drain support resources, and can drag down your product reputation. These customers might never achieve success with your product (because they needed something else, or weren’t ready, or were just hunting for a deal). They often become the loudest complainers, consuming your CS and engineering time with endless issues or feature requests, and then leave anyway.
In contrast, focusing on ideal or “stretch-fit” customers yields better retention and expansion.
Bad-fit customers often arise from desperation or broad targeting - e.g., accepting a deal from an industry you don’t serve well, or heavily discounting for a customer whose needs don’t align with your roadmap. Sales might celebrate the win, but later the product team groans because this customer pushes the product in an unintended direction. And when they inevitably churn, you’ve wasted time and taken a morale hit.
From a pricing standpoint, bad-fit customers are often lured by improper pricing strategies - e.g. huge discounts (again connecting to Lie #1) or mis-positioned packages. If you find you must contort your pricing or product a great deal to close someone, that’s a flag: maybe this customer isn’t a great fit to begin with.
The highest-performing SaaS companies are surprisingly comfortable saying “no” to prospects that don’t fit. They have clear Ideal Customer Profiles (ICP) and qualification criteria, and they’d rather pass than sign a customer who will churn in 6 months. It’s a discipline that pays off in better NRR (net revenue retention) and lower churn.
Takeaway: Prioritize customer fit over sheer volume. This means your sales team should be qualifying leads hard against your ICP - and disqualifying those who don’t fit, rather than twisting your pricing/product to close them.
Set incentives that encourage healthy selling: for example, tie commission or bonuses to retention (if a customer churns in under a year, claw back some commission or count it against targets). This aligns sales with long-term success, not just bookings. Use your pricing and packaging to attract the right customers: e.g., have entry-level offers that appeal to your target segment but maybe not to those who wouldn’t get value. It’s better to grow a bit slower with solid customers than to spike ARR with a bunch of quick-win deals that evaporate and leave a stain. In practical terms, regularly review churned accounts and identify warning signs that they were a bad fit (certain industries, super high discounts, etc.), then feed that back into sales strategy. When you build a customer base of raving fans who get value (because they were the right fit), they’ll generate referrals and expansion that more than make up for turning away a few bad apples.
11. “Multi-year deals with big discounts are automatically great for us.”
The Lie: A large enterprise wants a 2 or 3-year contract and asks for a heavy discount in return (say 20% off for 2-year, 40% off for 3-year). Sales eagerly says, “Lock them in! It’s guaranteed money and a big ACV - totally worth the discount.” The belief is that multi-year contracts are always a win because they secure longer commitment and reduce churn risk, so any discount to get that is justified.
The Truth: Multi-year contracts can be valuable, but deep discounts can hurt your revenue if not carefully managed. Discounting years 2 and 3 often results in giving up revenue you would have earned otherwise. As Jason Lemkin explains, "If you expect the customer would have stayed on for year 3 at full price, then that 40% off is pure loss.” You essentially lock in a lower price than necessary, and your long-term ARR suffers.
Many SaaS companies in growth mode did big multi-year, prepaid deals for the upfront cash (especially when money was cheap). Come renewal time 3 years later, they found those customers expecting to keep the discounted rate or even renegotiate down - and the vendor had limited ability to adjust since the customer was used to a low price. If instead they’d sold annual terms, they could have potentially raised prices or at least kept full price in those later years.
There’s also the factor of flexibility: locking a customer in for 3 years at a low rate might prevent you from repricing or packaging changes as your product evolves. If you significantly improve the product in year 2, you can’t capture any of that value from a pre-committed customer until year 4.
This doesn’t mean multi-year deals are bad. They can reduce churn risk and signal strong commitment. But smart SaaS companies often handle them by guaranteeing price (no increase) for the term rather than giving a steep explicit discount on the list price.
For example, you say, “Our price is $100K/year. If you commit for 3 years, we’ll lock that rate (and perhaps throw in a minor add-on).” This way, the customer feels they got a concession, and you get the term length without eroding the base price drastically. Another tactic is tiered ramp-ups: maybe Year 1 at $80K, Year 2 at $100K, Year 3 at $120K as their deployment grows - ensuring you don’t undersell usage that grows over time.
Takeaway: Be strategic with multi-year deals. Don’t reflexively give huge multi-year discounts without analyzing the trade-off. If your net retention is high (i.e. customers tend to stick and grow), you have less reason to sacrifice price for term - you’re likely to keep them anyway. In such cases, focus on term commitment with minimal discount, or use multi-year as a negotiation lever (“we can hold pricing for 2 years if you sign for 2 years, but no big discount”).
If your churn is higher or you really value the upfront cash, you might do a discount, but keep it reasonable and try to at least get full prepayment for those years in return (to help cash flow). Always model the effective ARR and LTV impact: a 3-year $300K deal with 30% off years 2-3 might only net ~$240K total, whereas annual $100K renewals would be $300K - that’s a big difference. Sometimes it’s worth it for certainty, but make that decision deliberately, not blindly.
Your pricing framework should include guidelines for multi-year deals: e.g., “standard 10% off for 2-year, 15% for 3-year, must be prepaid” or similar, rather than ad-hoc large cuts. By doing so, you’ll ensure multi-year contracts truly benefit your SaaS business with both retention and robust revenue.
Conclusion
Your sales team’s input on pricing is invaluable - they’re on the front lines with customers. But as we’ve seen, their quick fixes and assumptions (“lies” they tell you, and sometimes themselves) can lead you astray if not challenged with data and strategic thinking. Great pricing strategy marries sales insights with a broader view of value, market, and long-term business health.
By busting these 11 myths, we’ve uncovered the truth: Pricing is a powerful growth lever, not just a gimmick to close the next deal. SaaS leaders who get it right achieve better net retention, faster growth, and more resilient businesses. So next time you hear one of these claims from your VP of Sales, pause and recall the research and examples here. Use Monetizely’s 5-step framework - Segmentation, Packaging, Pricing Metric, Rate Setting, and Pricing Operations - to guide your decisions instead of knee-jerk reactions.
Keep your pricing honest and strategic, and you’ll not only close deals - you’ll close the right deals at the right price, propelling your SaaS business to scale with healthy economics. Now that’s something both your sales team and CFO can toast to. Cheers to pricing intelligently in 2025 and beyond!
