SaaS and volume discount
1 Answer
What you're describing, just adding an extra segment with a minimum quantity, is quite common. Yeah, there's a discontinuity around the price change where by buying more seats you pay less money. Some companies just leave it at that (you can brag that you've got those extra paying customers, even though they might technically be going unused, so you do get at least something small out of it). Some customers are worried enough about the price that they'll run the math themselves and buy the additional seats to get a discount, others will just simply say, "I really only need 30 seats," ignore the math, and buy 30 seats.
Of course, a common solution is to charge the lower price for each additional seat beyond the limit. So the first 35 units sell for $50/seat, and the 36th sells for $40/seat.
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Thanks for the suggestion. But how to deal with a customer who wants to start with 40 seats ? He will find the proposal to differentiate between the first 35 and 5 subsequent cumbersome ? – Mac 10 years ago
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I don't think so. Your order form will have him type in a quantity, your site will do the math, and you'll show him the total. You can even show him the amount saved over 40 full priced seats as a bulk order discount. If he wants to fiddle with the price he can try other seat counts and see the result. It's really not that cumbersome. Just state, "15% off of seats after the first 35." This approach is quite common. People are used to it. – rbwhitaker 10 years ago
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If you're really worried about the price complexity, don't offer a bulk discount. Just always charge $35. Perhaps you can then build in a way to get x% off the whole order, which you can give to them by email if they contact you with concerns about the cost, or asking about bulk discounts. They'll feel like they're getting a deal and you can give them whatever discount you feel comfortable with, based on the quantity of orders. – rbwhitaker 10 years ago
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Along with my last comment, bulk discounts don't really make sense for software anyway. With physically manufactured goods, it's cheaper to manufacture in bulk, and cheaper to ship in bulk. So bulk discounts make sense. With SaaS, or software in general, there's effectively no cost savings in making a bunch of copies. 50 users will load the system just as much if they paid individually or as a group. I don't think you should feel obligated to give bulk discounts at all, especially if you're concerned about the complexity of pricing. – rbwhitaker 10 years ago
