General Strategy

Pricing Model: Fivetran’s pricing is unique when compared to other SaaS offerings in that as consumption increases, rather than pricing going up on a relatively linear basis, it increases on a logarithmic basis instead. In a nutshell, this means that economies of scale and better price per unit is baked in as you grow. Fivetran prices according to monthly active rows (MAR), and then adds on additional incentives from there.

* There are three main Fivetran service tiers, off which price per row starts and then increases. Each tier adds more functionality and capability for features as you go up tiers. As mentioned above, price per row grows cheaper as you grow    

*Starter    

*Standard    

*Enterprise

* Standard and Enterprise are the most common tiers Tropic sees customers on. These are also the most negotiable.

* Discounting per row is baked in, but Fivetran also offers connector specific discounts that lower the effective monthly active rows you are charged for. Sometimes, depending on volume, these discounts can reach higher than 50%

* In addition to connector specific discounts, overall MAR discounts can also be added on if negotiated, these apply to all MAR usage. Fivetran has been trying to sunset these but we have seen success in negotiating and keeping them.

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As of late, Fivetran has introduced a new Enterprise License Agreement (ELA), which is an Unlimited MAR plan. You can essentially use as much MAR as you like during the term length. Pricing for this varies on a case-by-case basis and depends on the customer's specific use case. Fivetran reserves this offering for customers with spend above $100K, however - will make exceptions in some cases. As this is a new offering, we have not seen Fivetran offer discounting.

General Strategy

1. Leverage Fivetran's Pricing Model Changes

• Emphasize the shift from account level discounts to connector level discounts to stress the loss of flexibility compared to competitors who may not price this way.
• Request a breakdown of usage by connector type and push for larger discounts on the most-used connectors.
• Highlight the importance of understanding Fivetran's pricing model through detailed discussions and requesting screenshots for clarity.

2. Utilize Growth and Volume for Better Deals

• Lean into any MAR (Monthly Active Row) growth to argue for both connector-level discounts and overall consumption discounts, exploiting Fivetran's logarithmic discounting scale for higher volume.
• Present conservative or even decreasing MAR projections at renewal to make a flat renewal rate seem like a favorable deal, maintaining or increasing discounts.

3. Strategize Around Contract Terms and Usage

• Review previous contracts for potential rollover credits eligibility, and negotiate aggressively for these, especially if there's been a reduction in MAR consumption.
• Use historical usage data and budget constraints as leverage to secure high discounts and negotiate for rollover credits from previous terms.
• Ensure early sign-ups include the application of rollover credits, enhancing the overall value of the agreement.

4. Assert Budget and Competitive Pressures

• Stress budget limitations and the finance department's reluctance to approve budgets as a tactic to preserve discounts or secure more favorable terms.
• Threaten to switch to month-to-month billing or highlight the possibility of exploring competitor solutions to pressure Fivetran into offering better terms.
• Reference any prior service outages that affected your operations as additional leverage in negotiations.

5. Engage Effectively with Fivetran Representatives

• Approach negotiations with a clear understanding of Fivetran's service model and insist on walking through the agreement with a representative until all aspects are clear.
• Discuss potential service improvements or solutions to past issues as part of the negotiation to not only secure financial benefits but also to enhance service reliability and performance.

Custom Strategies:

Strategy #1: New deal or renewal where there is growth in MARStep One- Forecast MAR consumption and figure out which connectors will be used the most        

* Stay conservative on what your overall MAR consumption will look like. It is better to undershoot than overshoot.      

* Fivetran will usually not provide MAR rollover in your following term unless you commit to a minimum of what you purchased in the prior term        

* If you have connectors that you know will be using the bulk of your MAR consumption, make a note of this and inform your Fivetran rep

‍Step Two- Inform your Fivetran rep on your planned MAR consumption/growth in MAR consumption

* Once again, be conservative here. It actually may work to your advantage to undershoot even further on your actual projected MAR in order to give yourself a buffer to increase later in the negotiation and use that as leverage to ask for further discountingStep Three- Receive a first quote from your Fivetran rep based on your first conversation, and return with feedback/asks requesting better discounts/economies of scale      

* Tell your rep that in return for this MAR count/growth that you are expecting significant connector specific discounts for your top consumption connectors          

* Justify this by saying that not only is better economies expected due to this growth, but that you are restricted from a budgetary perspective and are being pressured by your finance team          

* “Finance will not approve any renewal/contract where the final price here doesn’t fall under X as that is our budget, we need the Fivetran team to work with us here in order to close a deal”        

* Also let them know that you are expecting an overall MAR discount as well in addition to the connector specific discounts  

Step Four- If the above approach doesn’t get you to where you need to be, begin bringing other levers/methods of pressure into the mix        

* Up your MAR consumption to your actual projected consumption        

* Go back to to your rep and let them know that you ran numbers again and found out that you need to increase consumption more than expected        

* As a result, you need additional discounting to make the increase justifiable to your finance team, etc. 

* Offer a multi year term if comfortable with a longer commitment. Start with a two year and then up to three if that interests you for further discounting.

* Offer co-marketing (a case study, etc.) in return for better discounting        

* Mention that if better discounts aren’t achieved, you may need to move forward with/evaluate other competitors (Stitch, etc.)        

* As a last resort, you can escalate to a more senior member of your team to express disappointment in the lack of pricing flexibility and willingness to explore alternatives if necessary

‍Strategy #2: You have a flat renewal and want to avoid any decrease to your current discounts or uplift to your pricing    

* NOTE: This strategy can also be used for actual downgrades in usage by anchoring even lower than your target/projected usage    

‍Step One: Analyze your usage and come up with a conservative estimate, don’t overshoot.   Step Two: Undershoot on your projected usage when you tell your rep or even tell them that you plan on downgrading compared to prior term (even if this isn’t true)        

* “Budget scrutiny on our spend with Fivetran has us searching for ways to do the same with less row usage, as a result we need to go down on our usage”        

* Your Fivetran rep will probably be alarmed here and will likely initially provide quotations that decrease your discounting   Step Three: Use these new quotations to your advantage to get an offer that is flat in price, discounts, and usage (or as close to flat as possible) to your prior term        

* Express disappointment in the decrease in discounts and how this is ruining your cost per unit and ROI on Fivetran. Mention they are gouging the price.        

* Mention that you’d be willing to keep the renewal quantity flat to prior term but you need to maintain the same OR better discounting as the prior term in order to justify it, downward revisions on discounts won’t be approved.    

Step Four: Utilize levers detailed in step four of Strategy #1 if necessary

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