When and what to tell beta customers about B2B SaaS pricing

I recently advised a B2B founder who asked how transparent he should be about pricing with early beta users who would initially enjoy free access to his company's proposition.

He asked whether he should tell users:

1. This is the current expected price and we are waiving it for 12 months for early adopters. OR
2. Not mention pricing and try to get them to convert to paid plans later on once pricing is more defined

This is not an unusual problem. Other than always trying to avoid nasty surprises, there is no hard-and-fast answer because it will depend on what you’re selling and who you’re selling to.

A few points to keep in mind:

1. Some price discovery work should already have been done before the product enters beta. It’s reasonable not to have ‘nailed down’ a final price, but there should be a fairly narrow expected range.

2. If you’re selling something mission-critical and/or something with high switching costs, then many potential early customers will be deterred if they don’t know what the price will be after the free period expires.

3. If you’re selling top-down it'll be much harder to avoid giving some early price commitment compared to selling bottom-up.

4. Even if you’re giving beta customers free access for an initial period, it’s strongly preferable to ask them to sign contracts which will automatically convert them into paying customers (at a defined price) when the beta expires. This can be sweetened with a guaranteed discount (e.g. 20% off the list price for the first year). Getting these contracts in place early is obviously helpful for the business, but can also be compelling to potential investors. Use a break-clause if necessary, so that beta customers have the comfort of knowing they can change their minds. But try to get contracts in place.

5. Pricing is always an iterative process, and whatever you decide today, next month or next year, it’s likely you’ll be making pricing adjustments further down the road.

6. If you’ve already done price discovery, and have ballpark figures in mind, it’s worth asking yourself: what would be the downside of now telling beta customers the price they’ll be asked to pay after the beta? You can give them a guarantee that if your post-beta prices increase between now and then, they’ll be grandfathered into the price you’re quoting them today for 12 months.