business-plan, sales, pricingI’m running a SaaS that mines data from video files. I spoke to a client who wants it. However, it requires some improvements to the product that will take development efforts about 3~4 weeks.
I say, if you commit for a year, we’ll do it for free.
Prospect agrees and asks for a proposal of what we talked about on the phone…
Now this is where I am lost. What the hell is a proposal? What do I write in it. Is there a sample template I use for SaaS?
Even more worrisome, what if I’m end up having to do so much more work than what was anticipated?
However a competitor’s software apparently does the job but they are worried about the total cost where as my pricing is a lot simpler (unmetered usage for high $$$ / month X 12 months). I estimate about 100 hours of work on product but I am willing to do it because my competitor’s product does it smoothly and I need to be up there in terms of quality.
I just never saw this coming?! Like the other day I was thinking, who in the world would end up paying this for an entire year up front.
It’s a SaaS I bootstrapped, worked on the product by myself, so I don’t want to blow this off, and they seem to want this because of the pricing being low….
Maybe there’s a way to get my foot in the door and raise prices or be able to change it in case I end up losing money?
All this is very new to me, please help!
In a nutshell your lead is asking you for a contract. This is something he can fallback to just in case – i.e. so he can say “You’ve failed to deliver within the agreed upon timeframe, so my commitment to your service is void” in the event you don’t ship what he needs on time.
There are “work for hire” agreement templates and the like around the web. For instance on Docracy. (You’ll need to amend the intellectual property clause, of course.)
Anyway, the onus is on you to either deliver or walk away as suggested by blunders. (And frankly, I kind of agree with blunders, unless you’re truly certain you’re willing and able to actually ship what your prospect needs on time while covering all of the potential costs yourself.)
In your future interactions like this one, come prepared:
Lead: I absolutely need feature X. Would you develop it in exchange for me signing up?
You: It’s on our road map, as we occasionally get the request, but it’s not high priority at the moment.
I offer you a deal, though: If you sponsor the feature, we can shift it to the top of our TODO list, with the added perk of you being part of the development process so it does precisely what you need it to. You’ll additionally get a year of service at no extra charge, and a warm thanks on our company’s blog.
If the client expresses interest, collect data on what they need exactly, guesstimate how much effort is needed to implement the entire thing, and translate it to money as any freelance developer would do.
Offer the potential sponsor to cover part (or all) of that cost. If the sponsor balks, consider whether you might have other clients or leads who might be interested and try to organize a co-sponsorship. (Or better yet, ask the lead if it knows anyone else who might be interested, and suggest that they come back together – you’ll get a referral as a bonus.)
I’ve done this a couple of times back when I was selling software. Clients with a genuine need are fairly receptive if you offer to split the costs in two. (Inflate your guesstimate, within reason, to shift more of the burden onto them.) In doing so, you basically position yourself as offering to do what another freelance could, at half price in exchange for keeping the intellectual property.
If all else fails, the feature is still on your TODO list, albeit on your own terms and schedule, and the lead can use another service in the meanwhile.
Congratulations on getting your first RFP (Request for Proposal)! If you’re an enterprise SaaS you can be sure it won’t be the last. First of all, the Proposal may, or may not, have formal contractual terms outlined in it. Or, it may reference a separate an SOW (Statement of Work)… which can serve as a contract. But don’t be surprised if you submit your Proposal and their corporate attorney turns the terms contained therein into a nice legally enforceable contract.
You have not won the deal yet, that is probably your first priority The deal isn’t done until the ink is on the paper. Actually, in the world of startups, your confidence level shouldn’t get too high until you’ve actually cashed the down payment check you’re going to ask for when you submit your proposal. So you need to focus in on winning this opportunity, even more so if you have another startup competitor trying to win the same deal.
Denis de Bernardy offers excellent insight and guidance. I would add that buyers buy enterprise software because they: 1) have a real serious problem that they need fixed, 2) believe that your solution can cost-effectively and/or uniquely solve this problem, and 3) like you and believe you will do a good job with the project delivery.
Here are some things enterprise software buyers don’t like: 1) looking bad in front of their bosses or peers from another IT project gone wrong, 2) the problem they’ve invited you in to discuss, 3) the sales guy they feel like has been b.s.’ing them since minute one, 4) you going out of business because you didn’t have enough money to properly deliver or fund your operations.
My experience at this stage in the process is to:
Proposals often have multiple readers I use my proposals to clearly articulate the entire landscape of the problem and the approach we will take to solve that problem (inclusive of the product), and to provide my client with a document he or she is going to be proud to share with his/her bosses and peers. “Boom, look at this… you know that problem… I found the person to solve it.” Because then you can charge the price that gets the job done right, and helps you build your business. Your prospect might need this proposal to walk it around the office and get buy in. So find out who needs to review it and write it with those needs in mine.
Components I like to include in a Proposal (not all apply to you, but pick and choose):
If you’ve properly qualified your prospects pain, and built a good relationship where you’re moving towards a trusted status, a proposal that covers this ground rarely loses in my experience, and price matters much less.
Contractual terms in your Proposal, attached SOW or a contract they generate for you Protect if possible:
Don’t worry about:
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