(These are also signals that you should run for the hills at their first utterance.)

In our last post on the subject we told you that If A SaaS Provider Offers You a 95% Discount you should

Slam the door, lock it; close the shutters, bolt them; don’t answer the phones, and rip the cables out of the wall; turn on the frequency jamming, and throw the cell phones in the Faraday cage; close the gates to the parking lot, and man security 24 hours. Because, no matter what they told you, the discount meant one of two things:

1. the provider was trying to rip you off or
2. the provider is in serious financial difficulty

And both are reasons NOT to do business with the provider.

Unfortunately these aren’t the only tricks and traps you have to watch out for. Other common tricks and traps include:

• 1. We will give you a 50% discount off of standard prices if you don’t do a bid and just award us the contract without going to market.
• 2A. Since we lost the bid, you can have it for a 95% discount and a right to use your logo on our webpage …
• 2B. … but note that, once the contract is signed, we have to right to reprice your entire enterprise deal based on the total number of associated members [including janitors, advisors, and part time contractors who will never use the software] in your organization on LinkedIn (if we’re charging by the seat) and/or average daily use in the prior month (based on CPU cycles and storage against our chosen enterprise averages). [This will probably quadruple the quote within a few months.]
• 3. If you [still] don’t select us after we drop our price (multiple times), we will go straight to the CFO/CEO of your company to tell them YOU are an incompetent fool bribed by our competitor who is making a huge mistake.

Before you even think twice about their offer, you need to remember that expecting them to treat you well as a client after you sign the contract is akin to expecting your abusive significant other who beats you regularly in drunken fits to all of a sudden stop once you get married. (And yes, I went there. It’s the same rationalization. As per my last post, if they give you this much of a discount, they’re losing money until they can trigger price escalation clauses or change orders, and even then they might not break even on your account. As a result, it will be too costly for them to give you any support whatsoever and, thus, they will ignore you the majority of the time and treat you poorly when they do respond.)

While I shouldn’t have to state this again, all of these situations happen way too often in our industry when companies are struggling (due to taking too much investment at too high of a valuation which resulted in angry investors breathing down their neck with nooses in one hand and pitchforks in the other when they didn’t make ridiculous targets) or they hire that ¹/₂₀ pathological salesperson (with a great close record at his last job) who only cares about his^* year end bonus and not about whether or not you actually get served once you’ve paid the bill.

^* Yes I’m being sexist here as a man is 3 times as likely to be psychopath than a woman, and a salesperson in enterprise software is 2 times as likely to be a man. This which means that your chances of a being ripped off are at least 6 times higher (and I’d argue more) if the salesperson is a man. (I can’t speak for everyone, but like many who have been in the enterprise software space for 30 years, I’ve encountered my share of sleaze-bags and grifters, and, as you might have guessed, every single one of them has been a man — and, FYI, they don’t think much of technical people either!)

Slam the door, lock it; close the shutters, bolt them; don’t answer the phones, and rip the cables out of the wall; turn on the frequency jamming, and throw the cell phones in the Faraday cage; close the gates to the parking lot, and man security 24 hours.

No matter what they tell you, a 95% discount from a vendor always means a combination of EXACTLY two things.

1. the provider was trying to rip you off (because they thought they could due to their customer portfolio, surging popularity, or your lack of market SaaS pricing intelligence) and
2. the provider is in financial difficulty

That’s it. The only unknown is the weighting between those two realities (and just how severe the financial difficulty is).

They’re NOT giving you a huge discount because they want your logo or case study.
They might want your logo and case study, but a solid provider with a solid solution who creates a good relationship can certainly get it without 95% discounts — most customers who get real ROI from a solution offered at a fair market price are happy to give you a case study for the free publicity.

They’re NOT giving you a huge discount to prove value in exchange for future purchases.
Everyone knows there’s no guarantee those will happen, even if you get the full promised value of the solution. You might have no use for their other solutions. You might never need any additional seats.

And any other reason they can come up with is also a lie.

Unless the company is run by a bunch of cons where their entire business ethos is charge as much as you can for as long as you can until the market realizes how much they are being ripped off (and then the cons skip town), the only reason a company will offer that level of discount is because they are desperate to get a sale on the books because, if they don’t, someone is losing their job in the best case or the company is going bankrupt in the worst case. Either way, that’s not a vendor you want to be putting your faith in. You want honest companies who price based on actual costs with a fair markup and who are financially stable — not dishonest companies who price based on how much they think they can scam you while being on the verge of bankruptcy.

And never kid yourself that it’s worth the risk because all the company needs is a few deals and a right-size on its pricing because a company losing money can’t stay in business — and any piece of enterprise software fairly priced at 1M will cost the company offering it at least half of that sale price to adequately support. You need to keep two things in mind

1. cloud compute costs are real and significant and, thanks to Gen-AI that is over-straining global compute infrastructure, rising year-over-year
2. the development talent needed to maintain and secure your solution (and despite claims, Gen-AI can’t do either, especially since it typically makes your solution less secure) is not cheap either

So if you intend to have 10,000 users hitting the app daily and doing at least one compute-intensive task (and LLM queries are compute-intensive, at least 20X as compute intensive as a classic Google or Lucene search, and possibly 200X depending on what’s being asked), your provider’s cloud costs will be in the six figures — which means the 95% discount isn’t even covering their hosting costs and they are digging themselves into a deeper grave just by signing you!

In fact, I’d argue it’s a red flag if they do. But let’s backup.

A trustworthy vendor is one that

1) Clients Trust

2) Clients’ Third Parties Trust

3) Suppliers and Partners Trust

4) Third Party Analysts and Consultancies Trust

… and all of these will imply trust in their recommendations and reviews, even if they don’t explicitly say it.

Digging in.

1) They treat you like a client from the first interaction.

The first interaction asks about your needs, not just what you are looking for.

They tailor the demo to your business and categories.

They answer your questions openly and honestly, don’t deflect from features they don’t have today, give you real timelines, and offer workarounds until they deliver.

Once you sign, they guide you through implementation and change management, work beside you to train you, and always respond beyond SLA requirements.

They don’t just focus on immediate results, but on ensuring you level up and could continue to get results without them. They act like a partner.

2) They treat your suppliers and partners like clients too.

They’re always there to help, they make it easier for the supplier than their competitors, and prove their value to the point the suppliers want to use them too.

3) They’re fair to their suppliers and partners. They pay on time. They work with them. They take blame when it’s their fault and not the supplier’s or partner’s … who like working with them more than other companies.

4) Analysts and consultancies happily recommend them even when they’re not (paying to be) on the Map or a preferred partner. Sometimes when they aren’t even the most appropriate solution just because their customers are so much happier.

It becomes so obvious that you don’t even have to ask the question (and you know that if you did, almost every client, supplier, and partner would say they trusted them).

Remember this because
1) if you start seeing too many posts on how a certain company is one you can trust or
2) you have to ask if you can trust the company
you probably can’t!

Companies generally start pushing “trust” when a major competitor does something particularly untrustworthy that becomes public, third party surveys paint them as trustworthy, or they need a new angle to boost sales.

Plus, f you need to ask, something is setting off your internal alarms and you won’t trust them until you figure out what that is (and they’re not going to tell you).

Either way, play it safe and look elsewhere.

You may still get burned (and I have the scars to prove it), because sh!t happens, boards make changes, investors get ruthless, and world class pathological liars could still slip through the cracks and fool everyone for years, but you decrease your chances of being burned significantly by just looking for vendors who continually do the right thing (instead of just saying they do).