How to respond to request for custom terms for $50/month SaaS subscription?

Let’s say you have a B2B SaaS that charges $50/month. (It is no coincidence that this describes Feature Upvote :slight_smile: )

A would-be customer requests that you sign their custom documents before they become a customer. It could be custom T&Cs, custom privacy policy, or a custom GDPR-related document.

What’s your preferred response?

  • “Our affordable pricing doesn’t give us scope for custom agreements”. Which translates to “No”.
  • “Custom agreements are available on our enterprise plan.” Which costs $1000/month.
  • “Custom agreements require an upfront once-off fee of $1000, to cover our legal costs”.
  • Something else?

Custom agreements are available on our enterprise plan. Which costs $300/month.

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We’ve gotten this question a few times. Our lowest plan is a healthy $200/mo, and it’s still not worth it to even think about custom terms at that price range.

Our response is exactly your second option:

“Custom agreements are available on our enterprise plan.” Which costs $1000/month.

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Does this actually work? Never did for me. After introducing such a thing, they simply disappear.

I also think customers like this do not worth the effort, even for $10k/mo. If they can’t simply purchase the service, actual usage will be a nightmare with lots of questions, endless problems with everything, asking for custom development, integrations, on-site training, and stuff like this.

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After introducing such a thing, they simply disappear.

It’s important to remember that that’s also it ‘working’ :slight_smile:

To be honest, we’ve definitely had customers in the $1000-$1500 range that were more hassle than they were worth, and custom terms was often a warning sign.

We’ve also had a ton of customers (of all price ranges) who make what we first interpret as “implement this feature or we’ll cancel” type requests. Sometimes we’ve worked ourselves to the bone to implement them, only to get another feature request or for them to cancel anyways.

After a while we started getting careful with our phrasing. Never committing to specific timelines, saying “that’s on our roadmap for the near future”, or in extreme cases even subtly reminding customers that our service is offered “as is”. Then we brace for them to cancel, and they rarely do.

We still implement features based on feedback from talking with our customers of course, but try not to do it for any individual client.

So I think a lot of it is setting expectations even with the best clients. We’ve turned some pretty sour relationships around completely, although we’ve also had some that just didn’t work.

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I just ask why they need the custom agreement. Sometimes it’s just “we always do this, but will buy without”, or “ooh, you already offer a data processing agreement?”.

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After introducing such a thing, they simply disappear

That means you dodged a bullet, doesn’t it? :slight_smile:

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Depends on the custom document.
One of our customer requested me to sign a document saying that we do not employ child labor, adhere to basic workers rights and honor basic environmental protection rules.
I was happy to sign that.

It might also depend on the customer and the potential to grow the account. Large enterprises almost certainly have a bunch of procurement requirements, some silly, some reasonable, and some that may not have previously occurred to a smaller vendor. If the customer looks like a good growth prospect, a more open ended response to kick off a discussion to learn more might be a good first approach.

I’ve seen a similar situation first hand: a vendor was already in the technology stack for a project at a major enterprise, but the initial need was small (they started on a free plan). The vendor was asked for custom terms.

Instead of trying to secure an initial contract at a smallish value (say $1-2k per year), which was all the enterprise needed initially, they sent in the big-$$ Sales VP who completely trashed the relationship, asking for outlandish sums for things the customer did not need. They were eventually kicked out of the solution altogether, which is a shame, as the account surely had huge potential if managed properly.

It can depend on who is requesting the custom documents. Usually it is one of two scenarios (although there can be many outliers):

  1. The buyer (real customer) has to jump through hoops imposed by their legal or finance teams. In this case, I’d go with the very highly priced enterprise plan. If it was finance, they may tell the buyer they would rather save the money and accept your agreements. If it was legal, the buyer may pay the higher price and attribute it to their legal team. If the buyer has a lot of influence at their company, they may be able to override the request. If the buyer has little influence, they may move on and not buy even if they want it.

  2. The true buyer has asked procurement or someone else to make the purchase and they are requesting the agreements because they are told to push their own paper on to vendors. In this case, it is best to tell the true buyer (if you know who they are) you cannot accommodate custom agreements so they can override the procurement person. Dealing directly with the procurement person can be frustrating and take a long time because they usually have very little power to be flexible so you have to go over their head.