Now that we have big enterprises starting to sign up more and more and I'm facing a dilemma. These enterprise customers do not bring in any more money than any other customer. It's bad enough that all of these enterprises need invoices/quotes/PO's/etc and want to pay by check (just managing all that stuff can be a full time job) but they also want my company to agree to a their own terms & conditions in lieu of the standard ones that my company has in place.
1) Is this normal for SAAS-based businesses to sign custom sales agreements for every one of its enterprise customers? (pricing model does not change for them and they still pay the same low price as every startup or medium-size business that my product is sold to)
2) In your experience, how realistic is it to have a B2B business that targets all kinds of companies (from startups to enterprises), has small monthly subscriptions to its service, and not have to expect to manage a myriad of individualized sales agreements for its enterprise customers?
These enterprise customers do not bring in any more money than any other customerWell, there's your first problem. Your customers are giving you a signal that they are willing to be segmented into paying more.
Figure out what these kinds of customers are willing to pay for these kinds of extras. How big are they? What do they pay for other tools? If they have more than a handful of employees, their price tolerance is probably 10x what you're charging the self-serve customers, which should be more than enough to pay for the extra hassle of custom terms.
IMHO, customers who want their own terms, POs, invoicing, etc., should all be starting in the $1,000–1,500/mo range. Actually, make that $10k+/annually (the other problem). If these enterprise customers are big enough to need that kind of process in place, then that cost is still a rounding error in some department's annual budget.
Thought experiment: Would you give me custom terms and a year of service if I offered you a check for $10,000 today?
As an example: Heroku offers critical application services with customizable terms, invoicing, premium support, an account manager, and so on. After a few conversations with a sales person, Heroku's $0.05/hour dynos get packaged up into an annual contract with those custom terms, paper invoices, and all that stuff.
Charge more. Do the custom terms efficiently. Everyone's happy.
We are seeing more and more enterprises using their own base SaaS agreement. I see this trend continuing as the big guys like nothing better than standardisation on their terms. The agreements we see are not overly biased to the buyer, but watch for the warranty and termination for convenience language which they all play with.
Agree with previous responses, have an sme and enterprise commercial model, aggregate enterprise into a single license agreement, ideally multi-year and payment annual in advance. This will bring cash in up front, guarantee you revenues and improve your valuations - everyone loves contracted annual recurring revenue.
Sounds like a great position to be in, and this is easy to position with enterprise customers as a win win.