Office Hours Notes: Enterprise Pricing with Ulrik Lerhskov-Schmidt

Howdy pricing people!

Last week's Office Hours was a blast. Huge thanks to the folks that attended and asked such thoughtful questions. For those who couldn't make it, I wanted to share the top 5 takeaways that resonated most:

1️⃣ Enterprise Accounts Are Systematically Underpriced

Your largest accounts are often your most mispriced, and not by accident. Ulrik identifies three structural reasons:

They were won when your product was less mature, forcing bigger concessions

They had the most sophisticated procurement you'd faced at that point
You have the fewest "at bats" with enterprise deals, so you're essentially flying blind

The implication: don't assume your biggest customer represents your pricing ceiling. They likely represent your biggest historical discount.

2️⃣ You should Build "Enterprise-Only" SKUs You'll Rarely Use

Standard pricing is designed for 98% of customers but may only capture 50% of total value. For the top 20 accounts, Ulrik recommends creating specialized monetization tools:

Commercial SLAs (custom billing, multi-entity invoicing, contract flexibility)
Enterprise service tiers with dedicated support
Usage limits on legal entities or deployments

These can shift the revenue mix so that your core metric (price per seat, API call, etc.) becomes only 30% of the deal—with the other 70% coming from enterprise-specific add-ons.

3️⃣ Validate Price Increases Through New Sales First

When testing a 10x price increase for enterprise, don't start with your existing flagship accounts—your team will fold if they push back. Instead:

Test new pricing on prospects in your pipeline (it's emotionally easier to lose money you never had)
Close a few new accounts at the higher price point
Then approach smaller existing customers and roll them up
Finally, go to your largest account armed with proof: "Four accounts smaller than you are paying twice as much"

4️⃣ Horizontal Products Must Accept Value Leakage, Or Go Vertical

For horizontal infrastructure products, value-based pricing is structurally difficult because the value is created in each customer's vertical-specific application (the same ChatGPT subscription powers party planning for one user and M&A due diligence for another).

You have two choices:

Go vertical and chase value capture in one industry
Stay horizontal and accept you'll leave money on the table, then stop building 14-variable pricing equations trying to recapture it.

If you stay horizontal, use predictable front-door pricing with fair-use policies as the "back door" to catch extreme outliers.

5️⃣ Solve the "Success Penalty" with Stable Business Metrics

When your product works (e.g., cybersecurity reducing bot attacks from 1B to 100M requests), your usage metric collapses—and so does your renewal leverage.

The fix: anchor pricing to a stable business metric the customer knows upfront (total web traffic, employee count, revenue band) rather than the outcome metric that your product improves. You can translate this into a per-unit rate at initial sale, but the formal price driver stays constant even as your product succeeds.

Thanks again, and stay tuned! We'll be hosting a lot more of these.

Have a great week,

Rob

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