Give / Take in SaaS Prototyping and Pilots

Imagine you are ~6 months into a negotiation.
Total ARR could be significant, and multi-year terms being discussed.

Imagine you have passed considerable levels of cloud security clearances thus far including outside pen testing and outside vulnerability report.

Then the customer asks for a prototype! Hurray!

So you present them a humble quote, say $5k, to cover the prototype. The prototype cost would be a credit to their later spend, of course ('prototype terms')

After 6 weeks , they come back and say "We are evaluating the software so we don't want to pay this, but can assure you we will help you go the distance when your prototype is successful"

WYD?

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    • Profile picture of Colin Campbell
      @colin-campbell
      ( 7.7k POINTS )
      1 week ago

      This might be the wrong answer, and maybe I’m falling victim to a sunk cost fallacy here, but my instinct would be to just get the prototype stood up to keep the deal moving forward. So maybe instead of trying to negotiate on the cost of the prototype, I’d negotiate on something like payment terms, or try to get commitment to a faster turnaround upon delivery of the prototype.

      With a sales cycle that long, I’m assuming LTV is much higher than $5k.

      Then again, I’m highly amenable, and have never been one to push back on customer requests, so I’ll be curious to hear what your approach is @ajherkert. Or, anybody else who isn’t a pushover like me 🙂

      • Profile picture of Andrew Herkert
        @ajherkert
        ( 660 POINTS )
        1 week ago

        Thanks @colin-campbell ! Appreciate the note. This is the direction we tend to take as well. I believe showing the customer that we do attach value to our prototypes is important, then more often than not the impetus is more and more on the vendor to demonstrate value. Thank You for sharing!

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