Enterprise Pricing Strategies: How to Price for $1M+ Deals
Pricing enterprise deals is an art and a science. Price too high, you lose the deal. Price too low, you leave money on the table.
I've priced and closed $100M+ in enterprise deals. Here's the framework that works.
Related: Pricing works best when combined with proper qualification using MEDDIC and handling price objections effectively.
The Three Pricing Principles
1. Price to value, not to cost
Enterprise buyers don't care what it costs you to build. They care what it's worth to them.
2. Price to outcomes, not to features
Buyers don't buy features. They buy outcomes. Price accordingly.
3. Price to urgency, not to competition
Don't price based on competitors. Price based on the urgency of solving the problem.
The Value-Based Pricing Framework
Value-based pricing means pricing based on the value you deliver, not the cost to deliver it.
The framework:
- Quantify the problem - What does the current state cost them?
- Quantify the solution - What's the value of fixing it?
- Price to value - Price at 10-20% of annual value delivered
Example:
Problem: Production failures cost $500K per incident, 6 incidents per year = $3M annually.
Solution: Your solution reduces failures by 80%, saving $2.4M annually.
Price: 10-20% of $2.4M = $240K-$480K annually.
The key:
Don't price based on what you think they'll pay. Price based on the value you deliver.
The ROI Calculator
An ROI calculator helps buyers see the value. It also helps you justify your price.
The framework:
- Current state costs - What are they spending now?
- Solution value - What do they save or gain?
- Investment - What's your price?
- ROI - What's the return?
- Payback period - How long to recoup the investment?
Example:
Current state:
- Infrastructure costs: $2M/year
- Downtime costs: $3M/year
- Support costs: $500K/year
- Total: $5.5M/year
Solution value:
- Infrastructure savings: $1M/year (50% reduction)
- Downtime savings: $2.4M/year (80% reduction)
- Support savings: $300K/year (60% reduction)
- Total savings: $3.7M/year
Investment:
- Annual license: $500K
- Implementation: $200K (one-time)
- Total year 1: $700K
ROI:
- Year 1 savings: $3.7M
- Year 1 investment: $700K
- Year 1 ROI: 428%
- Payback period: 2.3 months
Pricing Models for Enterprise
Different pricing models work for different scenarios.
1. Per-seat pricing
Best for: Solutions where value scales with users
Example: $100/user/month for 1,000 users = $1.2M annually
2. Usage-based pricing
Best for: Solutions where value scales with usage
Example: $0.10 per transaction for 10M transactions = $1M annually
3. Tiered pricing
Best for: Solutions with different feature sets
Example: Starter ($50K), Professional ($200K), Enterprise ($500K)
4. Value-based pricing
Best for: Solutions with clear ROI
Example: 15% of annual savings = $500K annually
5. Custom pricing
Best for: Large enterprise deals with unique requirements
Example: Custom contract based on specific needs
The Enterprise Pricing Playbook
Step 1: Understand their budget
Ask: "What's your budget range for this initiative?"
Don't assume. Ask. Most buyers will tell you.
Step 2: Anchor high
Start with your highest price point. It's easier to come down than go up.
Step 3: Bundle value
Don't sell features. Sell outcomes. Bundle features into value packages.
Step 4: Create urgency
Limited-time pricing or early-bird discounts create urgency.
Step 5: Offer options
Give them 2-3 pricing options. They'll usually pick the middle one.
Example:
Option 1: Starter - $200K/year
- Core features
- Standard support
- 1-year commitment
Option 2: Professional - $400K/year (Recommended)
- All features
- Priority support
- 2-year commitment
- 20% discount
Option 3: Enterprise - $600K/year
- All features
- Dedicated support
- 3-year commitment
- 30% discount
- Custom integrations
Most buyers choose Option 2.
Handling Price Objections
Price objections are inevitable. Here's how to handle them.
Objection: "This is too expensive"
Response: "I understand budget is a concern. Let's look at the ROI. Based on what you've told me, this saves you $3M annually. The $500K investment pays for itself in 2 months. What's the cost of not solving this problem?"
Objection: "We can't afford this"
Response: "I understand. What's your budget range? We can work within that. Also, we offer payment plans and can structure this to fit your budget cycle."
Objection: "Your competitor is cheaper"
Response: "I understand price is a factor. Let's compare total cost of ownership. Our solution includes X, Y, and Z. What does their solution include? Also, what's the cost of downtime, support issues, or integration problems? Let's look at the total cost, not just the initial price."
The Discount Framework
Discounts are a tool, not a default.
When to discount:
- Multi-year commitments (10-20% per year)
- Large deal sizes (volume discounts)
- Strategic accounts (partnership potential)
- Competitive situations (win strategic deals)
When not to discount:
- Early in the sales cycle (you haven't proven value)
- Small deals (not worth it)
- Non-strategic accounts (no long-term value)
- Budget objections (they don't see value)
Discount guidelines:
- 5-10%: Standard multi-year discount
- 10-15%: Large deal discount
- 15-20%: Strategic account discount
- 20%+: Requires approval, rare
The Bottom Line
Pricing enterprise deals is about value, not cost.
Price to outcomes. Justify with ROI. Handle objections with data.
That's how you close $1M+ deals.
The Framework
- Quantify value - What's the problem worth?
- Price to value - 10-20% of annual value
- Justify with ROI - Show the return
- Handle objections - Address with data
- Close confidently - You've earned the price
Use this framework. Price confidently. Close deals.
That's the difference between leaving money on the table and maximizing revenue.