Dear SaaStr: When Should We Start Pushing For Multi-Year Contracts?

According to SaaStr, the era of pushing for multi-year contracts is over. Jason Lemkin explains that AI replacement cycles are compressing product lifespans to about eighteen months, making a three-year deal sound like a risky bet that the entire category won't become obsolete. ICONIQ data backs this shift: three-year contracts fell from twenty-eight percent of new business in twenty twenty-three to twenty-three percent by twenty twenty-six, while contracts under one year jumped from four percent to thirteen percent. Rather than fight this trend, Lemkin recommends a new approach: focus on delivering ROI in sixty to ninety days so customers naturally want to expand and renew. That's how top companies like Databricks and Figma win extended commitments—through results, not negotiation.

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