Should startups push for multiyear contracts rather than annual ones?

Lori Jimenez · Aug 2, 2023

Multiyear deals are a good thing to pursue right now, and both customers and sales reps should be financially incentivized to do them.

The current market focus is on gross retention, and multiyear commitments serve that; future-pricing incentives can make them compelling on both sides.

Scope: 'especially right now' — market-conditional

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Matt Plank · Dec 20, 2024

Multiyear contracts are important and sales teams should be given comp kickers to sell them

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Harry Stebbings · May 23, 2026

Multiyear contracts mean less than ever because without usage they are just deferred churn

16:50 Multiyear without usage is deferred churn

Chris Degnan · May 23, 2026

Multiyear contracts still matter; the answer is to drive usage post-signature by deploying forward deployed engineers or professional services and incentivizing the sales team on consumption, not just bookings

In a consumption model you have to get usage, so someone must be deployed to drive consumption of the contract

17:02 Multiyear works if usage is actively driven post signature

Harry Stebbings · Sep 11, 2024

The importance of the renewal cycle is a strong argument against three-year contracts, because you get customer feedback far less frequently than with annual contracts

Longer contracts mean fewer renewal events and therefore less frequent signal on customer health

39:31 Multiyear contracts reduce renewal signal frequency so favor annual