Your Government Pricing Model May Be Slowing Down Your Sales
Harvey Morrison: Co-Founder/CEO, Marion Square
Technology companies entering the Government market spend enormous amounts of time thinking about agencies, programs, partners, contract vehicles and sales strategy. Far less attention is often paid to something that can have just as much impact on whether a Government opportunity actually turns into revenue:
How the technology is priced and packaged.
This becomes particularly important for enterprise software, AI platforms, cybersecurity solutions and other technologies where the ultimate objective is broad deployment. The Government customer may want to start small. The vendor wants the opportunity to become large. Your pricing model needs to make both possible.
Government Needs an Easy Way to Start
One of the most effective ways to introduce an emerging technology into Government is through a pilot, proof of concept or initial operational deployment. But the Government customer should not need to assemble five different SKUs just to figure out what that pilot will cost.
A pilot should be easy to understand and easy to buy.
For many technology companies, that means creating an all-inclusive pilot package with a clearly defined price. For example, instead of presenting the customer with separate pricing for software licenses, implementation, training, support and engineering, the vendor might offer: Six-Month Operational Pilot — $250,000
The package could include the platform, deployment, implementation support, training, standard support and a defined amount of engineering assistance. The actual components will vary by technology. The principle does not. The Government customer should be able to understand three things very quickly: What do I get? What does it cost? How quickly can I get started?
Every additional pricing decision creates another question that someone inside the agency may need to answer. A well-designed pilot reduces that friction.
But the Pilot Is Only the Beginning
This is where many technology companies run into trouble. They have figured out how to sell a pilot. They haven’t figured out how to sell the enterprise.
I regularly see companies that are perfectly comfortable quoting $100,000, $250,000 or $500,000 for an initial deployment but become uncomfortable when asked:
“What would it cost to deploy this across the agency?” Sometimes the answer is essentially: “We would need to figure that out.” That is a problem.
If your objective is enterprise adoption, you need an enterprise pricing model before you win the pilot. Government customers have to think about budgets, procurement pathways and future-year requirements. Your champion may also need to explain internally what successful expansion would look like. If nobody can determine whether the eventual deployment will cost $1 million, $5 million or $20 million, it becomes much harder to plan for success.
Don’t Be Afraid of the Enterprise Number
Technology companies sometimes avoid enterprise pricing because the number looks large. They worry that showing a Government customer a multimillion-dollar enterprise price will create sticker shock. But a large number is not necessarily a problem if the customer understands what it represents. There is a significant difference between saying:
“The software costs $5 million.” and saying: “The initial operational deployment is $250,000. If the agency chooses to expand, pricing scales through defined deployment tiers, with full enterprise deployment capped at $5 million annually.”
Now the customer understands both ends of the journey. They can start small. They can prove the technology. And they know what success costs. That last point matters.
Enterprise pricing creates budget visibility. It gives program managers, CIO organizations, contracting teams and other stakeholders something they can plan around.
Build a Pricing Ladder
For enterprise technology, I generally like to think about Government pricing as a ladder rather than a single price. A simplified structure might look like this:
Pilot → Initial Production → Department/Component → Enterprise
Each stage should provide a logical path to the next. The pilot creates a low-risk entry point. Initial production moves the technology into an operational environment.
Department or component pricing supports broader adoption. Enterprise pricing establishes the economic framework for organization-wide deployment. The exact metric used to create those tiers depends on the technology. Traditional SaaS companies may use users, devices, endpoints or data volume. AI platforms might use agents, workloads, transactions or compute. Cybersecurity companies may use endpoints, applications, sites or protected assets.
But vendors should be careful about simply carrying their commercial pricing metric into Government. A pricing metric that works for a 500-person commercial customer can become economically or administratively unworkable inside a Federal department with tens of thousands of users and multiple components. The question isn’t simply:
“How do we normally price our software?” It should be: “What pricing structure makes it easy for this customer to adopt and expand our technology?”
Price for the Way the Technology Is Actually Used
This becomes especially important with emerging technologies. Consider an AI platform intended to eventually be available to thousands of Government employees.
Charging per user might appear logical because that is how many SaaS products have historically been sold. But what happens when the customer wants 30,000 people to have access?
A pricing model that looked reasonable during a 100-user pilot can produce an absurd enterprise number. Worse, it can discourage adoption. If every additional user creates another licensing charge, the customer has an economic incentive to restrict access to the technology you want them to deploy broadly. That is a pricing model working against the product strategy.
Sometimes another unit of value makes more sense: capacity, workloads, agents under management, transactions, sites, organizational size or an enterprise subscription. The pricing metric should align as closely as possible with how the Government receives value from the technology.
Separate Software From Services
Another important consideration is distinguishing the value of the technology from the work required to deploy and operationalize it. Government deployments frequently require integration, configuration, engineering, training and ongoing technical assistance. Those are real costs and should be priced accordingly. But burying everything inside the software license can create problems as the deployment expands.
A cleaner model may include:
Annual Software Subscription
The right to use the platform, including standard software support and maintenance.
Deployment and Implementation Services
The professional services required to configure, integrate and launch the platform.
Mission Engineering or Forward-Deployed Engineering
Additional technical resources that work directly with the customer to integrate the technology into mission workflows and expand use cases.
Premium Support
Optional enhanced support requirements beyond the standard support included with the subscription.
This structure also makes it easier to work through Government resellers, integrators and prime contractors because everyone can understand what is software and what is services.
Make Expansion Easy to Explain
There is a simple test I like for Government technology pricing. Imagine a program manager has successfully completed your pilot. The technology works. The users want it. The program manager now walks into a budget meeting and says: “We want to expand this across the organization.”
Can that person explain what the next step costs?
Ideally, the answer is straightforward: We spent $250,000 proving the technology. The next deployment tier is $750,000. Broader departmental deployment is $1.5 million. Enterprise deployment is $3 million annually.
Those numbers are illustrative, but the concept is important. The customer shouldn’t have to restart the commercial discussion every time adoption increases. Successful adoption should trigger a predefined expansion path.
Pricing Is Part of Government GTM
Government pricing is sometimes treated as something that can be figured out after the sales team identifies an opportunity. I think that gets the sequence backward.
Pricing affects the procurement strategy. It affects which contract vehicles can be used. It affects partners. It affects pilot design. It affects budgeting. It affects how quickly an agency can expand after a successful deployment. And ultimately, it affects time to contract and time to revenue.
The goal should be to create a pricing architecture that allows a Government customer to:
Start easily. Prove value. Expand quickly. Understand the ultimate cost.
That means technology companies entering the Government market should be able to answer two questions long before the contracting officer asks them:
How can the Government buy the first deployment? And: What happens to the price when this becomes successful?
If you have a great answer to the first question but not the second, you don’t yet have an enterprise Government pricing strategy.
How Marion Square Can Help
At Marion Square, we work with technology companies to develop Government go-to-market strategies designed to reduce time to contract, increase win percentage and create a more efficient path to Government revenue. Pricing and packaging are an important part of that strategy.
We help companies evaluate whether their existing commercial pricing translates effectively to the Government market and develop a structure that supports the full adoption lifecycle from an easy-to-buy pilot or initial deployment through broader production use and enterprise adoption.
That can include defining:
Pilot and initial deployment packages that are easy for Government customers to understand, budget and procure.
Enterprise pricing and scaling tiers that give agencies visibility into what successful expansion will cost.
The right pricing metric users, devices, workloads, agents, capacity, sites or another measure that reflects how the technology delivers value.
Software and services packaging, including implementation, deployment, engineering and support.
Channel economics that account for distributors, resellers, systems integrators and prime contractors.
Procurement alignment so pricing and packaging work with the contract vehicles and acquisition pathways Government customers are likely to use.
The objective isn’t simply to create a Government price list. It is to build a commercial framework that makes the technology easier to buy, easier to expand and easier for an agency to budget for at scale. If your company can price the pilot but hasn’t yet figured out what happens when the Government wants to deploy your technology across an agency, that is a conversation worth having.
Marion Square helps technology companies build the strategy, pricing, partnerships and procurement path to turn Government interest into scalable revenue.