When you’re trying to hit sales goals in the B2B software world, it’s easy to get caught up in the hustle to close deals. Discounts, bundling, delaying payment terms—they all sound like smart moves to get the deal done. But here’s the hard truth: every one of those incentives comes with a cost. If you’re not careful, you can end up signing deals that lose money.
This is where minimum deal economics comes in. Let’s break it down.
What Are Minimum Deal Economics?
It’s simple: minimum deal economics is the absolute lowest price you can charge without losing money on a deal. It’s not just about your product’s price—it’s about understanding all the costs that go into making a deal profitable.
Seems obvious, right? But it’s easy to overlook when you’re chasing targets or dealing with big-name clients. The reality is, if you don’t know your minimums, you risk cutting deals that hurt your business in the long run.
Why You Should Care
Here’s the deal: you can’t scale your way out of unprofitable deals. Every money-losing contract becomes a weight pulling your business down. And the idea that you’ll upsell or cross-sell later to make up the difference? That’s more wishful thinking than strategy.
The key to sustainable growth is discipline—knowing your numbers and sticking to them.
How to Calculate Your Minimum Deal Economics
To figure out your minimum, you need to know three main cost areas:
- Service Delivery Costs
This is the cost of actually providing your service every month. If it costs you $60/month to serve a client, you can’t charge less than that—period.- People costs (support, engineering, operations).
- Tech costs (hosting, APIs, tools).
- Customer Acquisition Costs (CAC)
CAC is everything you spend to sign a deal—marketing, sales, the works. To stay in good shape, you want to recover those costs (your payback period) within 12 months. Deals where payback takes 12–24 months can be okay for bigger clients, but longer than that? You’re in trouble. - Onboarding Costs
Unless your product is completely self-serve, onboarding isn’t free. Most companies need people, time, and effort to get new clients up and running. If onboarding costs you $1,000, spread that over the first 12 months—that’s about $83/month you need to add to your pricing.
Add these three together, and you’ve got your hard stop number. For example:
- Service delivery: $60/month
- CAC payback: $50/month
- Onboarding: $20/month
Total Minimum Price: $130/month
If you want to be extra conservative, add in 20% to the number to accommodate general business expenses. Since CAC is for 12 months, your profit margin will expand by that amount after the recoup period. Onboarding costs is similar to CAC.
If the customer won’t pay at least that minimum price, you’ve got to say no.
Don’t Gamble on Bad Deals
There’s always the temptation to take a deal that’s technically unprofitable because “we’ll make it up later.” Maybe you think upselling, cross-selling, or landing their logo for your website will justify it. Spoiler alert: it rarely works out. Instead, focus on keeping your business financially healthy from the start.
Stay Disciplined
Here’s how to avoid bad deals:
- Have an Approval Process
Any deal below your minimum should require extra approvals—think CFO, CEO, or even the board. Make it a big deal to sign unprofitable deals. - Teach Your Team the Numbers
Your sales team needs to know the cost breakdown and why it matters. Equip them with tools to check deal profitability on the spot. - Stick to Your Guns
No matter how flashy the client’s name or how badly you want to hit a target, don’t compromise your deal economics. A bad deal today can sink you tomorrow.
The Bottom Line
Running a profitable B2B software business isn’t about saying yes to every deal. It’s about saying yes to the right deals. Know your costs, enforce your minimums, and watch your business grow sustainably. Profitability isn’t magic—it’s discipline.