Should you discount your SaaS? When it helps and when it hurts

You should discount your SaaS when the discount buys you something specific: an annual commitment, more seats, a customer who would otherwise leave, or something non-monetary like a case study. Discounts hurt when they’re public and permanent, when they go to people who would have paid full price anyway, or when they’re used to cover up a product or onboarding problem. The safest pattern is to keep your list price fixed and give private, conditional deals to the customers who need them.

When does a SaaS discount make sense?

A discount is worth it when you get something back that’s worth more than what you give up.

Annual billing. A customer who pays for twelve months up front gives you cash now and won’t churn for a year. Most SaaS give something for that, often around two months free. See how much to discount an annual plan.

Volume. Ten seats at a lower price per seat is still more revenue than one seat at full price. Volume discounts are normal and customers expect them.

Customers who would leave otherwise. A customer paying 70% of your price for another year is worth more than a cancelled one. The hard part is giving it only to people who were really leaving, not to anyone who asks.

Something that isn’t money. A testimonial, a case study, a post to their audience, an intro to another potential customer. Early on, one good case study can do more for you than the money you gave up. More on this in asking for a testimonial instead of money.

A specific group you want. Startups, nonprofits, students, or customers in countries where your price is high relative to local incomes. A discount for a group is fine as long as it’s clear who qualifies and why.

When do discounts hurt?

When they’re for everyone. A public 30% off coupon also goes to customers who would have paid full price, and that money is just gone.

When they never end. A permanent discount becomes the real price. Customers who got it will feel cheated if it disappears, and you’ll get emails from new customers asking why they can’t have it too.

When they’re predictable. If you run the same sale every November, people learn to wait.

When the problem isn’t price. If people leave because they never figured out how to use the product, a lower price buys you a month at most. Fix the onboarding.

When they attract the wrong customers. Very low prices bring in people who will leave the moment they find something cheaper. They also tend to ask for the most support.

How do you discount without lowering your price for everyone?

Keep the list price on your pricing page exactly where it is, and handle better prices separately.

• Make discounts conditional. A better price in exchange for annual billing, more seats, or something non-monetary. Never “just because”.
• Make them private. A deal given to one customer over email doesn’t need to be public.
• Add a time limit. A lower price for three or six months, then the regular price. It’s easier to agree to, and it ends on its own.
• Let the customer propose it. Instead of guessing the right discount, let the customer tell you what they’d pay and what they’d give in return. Then you decide.

That last option is the idea behind HAGGIN. You share one link where customers who are about to leave over price can make an offer: a monthly or annual price, a number of seats, or extras like a testimonial or something else. You see each offer next to your normal price and say yes, counter or turn it down, and the prices on your site stay as they are.

What about coupon codes?

Coupons are fine for specific campaigns with a clear audience: a launch, a partner’s newsletter, a community you’re part of. Give each campaign its own code so you know where customers came from, set an end date, and limit how many times it can be used.

The problems start when coupons leak. Once a code ends up on a coupon site, everyone who searches for it before paying gets it. If that happens, expire the code.

How do you know if a discount worked?

Compare three things for customers who got a discount and customers who didn’t:

• How many converted.
• How much revenue each one brought in over the first year.
• How long they stayed.

If discounted customers convert more but leave sooner and bring in less over a year, the discount didn’t help. More conversions with people staying about as long is a good sign that it did.

FAQ

Is it bad to offer discounts on SaaS?

No. Discounts tied to annual billing, volume, or specific groups are normal. They become a problem when they’re public, permanent, or given to everyone, because then they lower your real price.

What is a typical SaaS discount?

For annual billing, a common convention is two months free, about 17%. Volume and nonprofit discounts vary a lot. There’s no standard number, and the right one depends on your margins and what you get in return.

Should I discount my SaaS to get my first customers?

A founding customer price can work, especially in exchange for feedback and a testimonial. Make the terms clear (the price, how long it lasts, what you expect in return) so it doesn’t turn into a permanent discount you can’t remove.

How can I offer discounts without devaluing my product?

Keep the list price fixed and visible, and make every discount conditional, private and limited in time. Customers paying full price never see a cheaper option, and the ones who get a deal know why.