October 30, 2019

How to Negotiate Software Pricing

The 15 Best Ways to Get Software Discounts, from 1,000+ Software Pricing Stories

by @maguay

Founding editor @capiche. Writer. Amateur photographer. Information architect. Older work: @zapier, @AppStorm. Personal blog: @techinch.
maguay's avatar

Software’s not all that expensive when you buy one app for one person. It saves time and makes you money, and all’s well.

Then your team grows, and by the time you pay for G Suite, Slack, GitHub, and all your other work tools, software’s not such an innocent expense anymore. Pay $75 per person for software, every month, every year—or around 8 programs, something that’s easy to imagine for the average employee. Save 10% on that for a hundred person team, and you save $9,000 a year. Save 50% on that for a 250 person team, and you save over a hundred grand.

It’s not that you should skimp on important software and crimp your team’s productivity. It’s that you should maximize your team’s budget to afford all the software your team needs. For that, you need the ways other teams save on software that we’ve gleaned from hundreds of software pricing stories.

Make the Most of Free Plans

Software’s expensive, but that’s balanced out by the wealth of free software available. If you only need basic features or use a tool rarely, odds are you can get by for free, at least long enough to decide if it fits your needs.

G Suite’s free for personal accounts. GitHub’s free for public projects—and now for private projects with 3 collaborators. Dropbox offers 2GB of storage for free, and OneDrive offers 5G. Slack is the entirely free, as long as you don’t need to search through your oldest messages. MailChimp sends newsletters to 2,000 subscribers for free. HubSpot’s CRM is fully free, as long as you don’t need its marketing tools. Not to mention the countless open source products that are entirely gratis. These and other popular apps—including Notion, Airtable, Asana, Trello, and Zoom—are ones Capiche members use for free the most.

You’ll still likely want to pay over time, but at first, it can make sense to get the most out of your free plan.

Pick Apps That Offer the Most For Free

Look around when signing up for new software. Some offer far more for free, enough to make them a far better deal, at least at first. Trello’s generous free plans is often mentioned as the reasons teams choose it over other project management apps. Better free plans are the main reason many Capiche users chose Drift over Intercom, or Amplitude Analytics over Mixpanel.

“I am paying zero for Drift. This is why I chose them vs. Intercom,” as one person wrote.

Work Around Limitations

Zoom calls are free for up to 40 minutes, which could be an annoyance or a handy reminder to keep meetings focused.

Slack free plan only shows the past 10k messages in search, so one team said they “are forbidding storing important information in Slack messages” to stay on the free plan. Treat it as ephemeral conversations, and save records of critical decisions elsewhere.

MailChimp includes 2,000 subscribers for free—but you could have multiple lists, as one team juggles. “We were able to get by with the free MailChimp package. That forced us to split mailings so we wouldn't go over their quota, but that made managing the lists more manual.”

These and other tricks help teams stretch free plans while getting started.

Do Extra Tasks

Need more Dropbox space? Dropbox includes a number of basic tasks including installing its apps that will give you an extra 250MB. Then if you invite your friends, you’ll get 500MB for the first 32 people who also install Dropbox.

Tricks like those are most common in new apps, and they may not be as generous. Airtable, for instance, offers $10 in credit for every friend you invite, while DigitalOcean gives you $25 credit the first time someone you invite pays for their hosting. And some apps offer discounts for tasks after you start paying, such as one team said about their MailChimp account: “We get… another 10% off for using 2FA.” It’s worth checking if your app has any hidden bonuses for using specific features or spreading the word.

Even with deals that are only valuable if you pay, they at least can help you start out for less.

Find Hidden Free or Discounted Versions of Products

Microsoft Office isn’t free. If anything, it’s one of the most widely used paid programs. Yet there is a free version of Microsoft Office: The Office Online web apps. Much like Google Docs, these simplified versions of Word, Excel, PowerPoint, and OneNote let you make documents and edit spreadsheets online without paying anything.

It’s not all that uncommon for popular paid software to have a more basic version for free, often as a mobile app or add-on. For example, Clearbit’s data enrichment tools starts at $99/month—but you can use Clearbit’s Gmail add-on to get contact details on 100 people a month for free. New Relic has a free plan (and discounted subscriptions) if you buy it as a Heroku add-on. Mathematica costs over $300 for home use—or you could use its Wolfram|Alpha site for similar features for free. Photoshop, even, has a limited we and mobile app for basic image edits.

It may take more research to find hidden plans and discounts. It may be a mobile app, an add-on, or a bundled deal with another product, but you might find a way to get the same features for free.

Another similar trick is to buy through resellers, especially those focused on your region. Amazon routinely offers slight discounts on Microsoft Office and Adobe Creative Cloud, while one reader told us they used a similar trick with Google Cloud: “We haven't negotiated yet, but we have found that buying through a local vendor (not direct purchase) would save 10% of the listed price.” You may even find default discounts for your location; Slack, for instance, offers special pricing for India, while many programs are cheaper in the US than they are in Europe or Australia, enough that in the age of boxed software it made sense to take a trip to buy Creative Suite.

Be an Early Adopter

Being the first to use a product can be painful. Broken and missing features, unusual ways of doing familiar tasks, and little to no support (outside of the product’s team itself, which may make up for it by being more supportive than their competitors) are par the course.

The upside of trying new products before others, though, is almost worth that downside. You’re literally on the bleeding edge of technology, and learn how to use it before others. You have the attention of the development team, who badly want users and feedback and will likely take your team’s needs to heart. Best of all—at least for that blissful beta period—you’ll likely get the product for free or far cheaper than it’ll cost once its officially launched. Even if you try the product early on, odds are its pricing is better today than it will be once its a widely used product.

You might get the product fully for free, as a beta Grammarly user said about their free account: “I was likely grandfathered in for free as an early user.” Another user signed up for Dropbox the first year, helped promote it, and got their free storage doubled. That’s most common with early beta accounts. Even if you’re a bit later, and sign up to a product when it’s new but not in beta, you may get a long-term discount with their early plans. Many apps let existing users keep their old plans when prices go up, making that early adoption pay off over time. That’s how Capiche users of Segment, Stripe, Teamwork, GitHub, Intercom, Basecamp, and more save on software.

Or, don’t upgrade. Another trick especially with desktop software is to continue using existing versions instead of buying the latest edition. That’s how teams used to save on Microsoft Office and Adobe Creative Suite—they’d stick to their existing software and wait perhaps for 2 or 3 new versions before upgrading. That can still work today with some web apps. Freshbooks recently launched a new version while letting existing users continue using “Freshbooks Classic” if they wanted. Basecamp famously keeps previous versions of their software running as long as existing customers want to use them, which is how one team told Capiche they save on Basecamp: “They normally price at $99/month but we got an account before pricing changed and are paying just $29/month right now. Seems like this legacy pricing is permanent as long as we don't cancel.”

Only Pay for Essential Team Members

Creative and development software is expensive, but at least your entire team doesn’t need it. Perhaps you’ll pay for Adobe Creative Cloud for your graphics design team, AutoCAD for your product design team, while your HR team needs recruitment software and your Support team a help desk.

That same idea works for other software. Zoom lets your meetings run as long as you need if you’re a paid user, so one team told Capiche they pay for one account, and “share the account across the team.” Other companies get by with a handful of shared accounts, paying for an account per team or meeting room instead of each team member.

For apps that you can’t share accounts, you can often invite contributors as guests. You could pay for Figma accounts for your design team, say, and still share preview links with others on the team so they can give feedback. Or as one team told Capiche about their Slack account, “We work a lot with freelancers and couldn't justify the price to have them join, so we decided to create larger channels with channel guests or multi channel guests.”

Another similar trick is to use individual accounts instead of team plans, which can sometimes be cheaper. Adobe Creative Cloud, for example, costs $49.99 for a personal account, or $79.99 a month for a Team plan that includes the same apps along with team management tools. “I refused to pay extra to be able to manage billing from one place,” one user told Capiche after saying that their team used individual accounts instead. You may even find better discounts on individual licenses, especially for Office and Creative Cloud-type products where licenses are sold at other retailers.

Get Startup Discounts

You can’t get all software for free or cheap. That is, unless you have a startup, in which case you can get a surprising amount of software for free the first year.

Over 60 teams told Capiche they’re saving on software with startup discounts, most commonly for Intercom, HubSpot, Mixpanel, Segment, and Drift. Some—such as HubSpot and Intercom’s—come from their popular startup discounts. Others require asking, which is how some teams told Capiche they got discounts on Notion and Mixpanel.

It’s worth searching for startup deals on your favorite software’s pricing pages before signing up, if your company is new. Check startup deal bundles and business credit cards, too, as they often have discounts on a wide range of software. If you can’t find a deal, ask—you might at least get an extended trial or limited discount.

Find the best deals in our guide to the best startup discounts, including those from Product Hunt Founder Club, FoundersCard, Brex, Stripe Corporate Card, and deals from specific apps including HubSpot and Segment.

Pay Annually

The most popular way to save on software is also the easiest: Commit and pay annually. It’s how nearly half of the people who shared pricing on Capiche save. Software subscriptions have long offered discounts if you pay annually, with typically two to three months free per year. Today, the different is even more more stark. Many apps either require annual commitments, or charge far more if you pay month-to-month.

Watch out for how software is billed. Adobe Creative Cloud, for instance, charges per month by default, but with an annual commitment you have to pay to cancel. Most other SaaS with annual plans bill you once a year, which requires a hefty payment upfront when you decide to adopt software. And what happens if you cancel during your subscription depends on the app.

So start out for free, then perhaps go with a monthly plan if possible at first to make sure this program works for your team. Then if it fits, commit for a year for the easiest way to save 20% or more.

Bundle and Bring the Whole Team

“They don't seem to budge much on pricing for individual products, but you can get a discount if you bundle two of their products together,” remarked one team about their HubSpot subscription. That’s a trick that holds true for many products, especially those that have been around for decades. If your team needs Adobe Illustrator, that would cost $21/month. Acrobat would add another $15, Premiere another $21, and so on. Or, you could get all of Adobe’s apps in a bundle for $53/month.

The same works for many web apps. HubSpot, Intercom, Salesforce, and more offer automatic discounts if you buy all their products together. And since each of their products are so extensive, you may be able to replace multiple products with that one suite, as one team told Capiche they did with HubSpot. “We quickly fell in love with the all-in-one aspect of the platform and began transitioning more and more of our business process over to the tool: MailChimp was replaced by HubSpot's native marketing hub, Yesware was replaced by HubSpot's sales hub.”

Or, buy more of one product. Sometimes it’s cheaper (or no more expensive) to bring the entire team. Jira’s annual plans, for instance, bill in sets of users. If you have 30 developers using Jira, might as well add more as your bundle costs the same for 26-100 users. With some products, such as Basecamp, one plan covers the whole team, so it’d be a loss not to bring in everyone. Even on monthly per-user pricing, the price per user goes down the more you add—something that’s also often true of metered items like Amazon AWS services or Zapier tasks. Volume helps you negotiate, too. As one reader said with Cloudflare, “Once you have up to 10 sites on Cloudflare, they will be much more willing to negotiate a reduced price with you.”

Negotiate

You’ve used up your trial and startup discount, need more than the free plan offers, and gotten the best listed price possible. You’ve paid annually, invited others, and maxed out your discounts and credit. Now for the hard part: Negotiating a better price for your team.

Some discounts are there for the asking—but sometimes you have to know what to ask for. Here’s what’s worked for the dozens of teams that shared their software negotiation stories with Capiche.

Share Your Circumstances

Startups get discounts easily—something worth mentioning in negotiations if the product doesn’t have a listed startup deal. If your company isn’t eligible by default for their startup deal, ask. There may be a similar plan they can work out for your team. HubSpot, for example, has both a Startups and Entrepreneur plan, the latter open to far more companies sizes.

Otherwise, get in touch and share your team’s needs. Explain your circumstances, team size, and how you plan to use their product.

Perhaps your team is small enough that you can’t afford to pay yet, as one user explained. “As a solo maker working on a SaaS product that integrates with Intercom, they reached out to me with a question why I'm not using their tools myself. My answer was that I can't afford it at my current stage and they gave me a 100% discount for their entire offering for a year.”

“Just negotiate a little bit better pricing based on a specific number of people that will be using a given software solution,” as one team suggested. Large teams with large subscriptions have the most leverage to negotiate, especially with software that’s billed per user. But small teams can grow, and most products would rather you be a customer at some point.

Another Intercom user got a discount based on their usage being different from default. “We explained that our use case is different than most SaaS apps and they were willing to drastically increase our tier of how many contacts we could have. This basically cut our bill nearly in half, from $1500 to $750/month.”

Ask for a Unique Plan

One size doesn’t fit all, especially with software plans. Much like the Intercom team above, you may find that your team needs something different from default. Hidden plans and features may be there for the asking.

DocuSign, for instance, usually charges per user with a set number of documents per month. A team that needed to use DocuSign only occasionally negotiated a plan that fit their needs better: “We're paying $1.35/envelope with no monthly fee I don’t think they have any pay-as-you go plans listed on their site, but this has worked really well for us so far and was easy to negotiate.”

Or you might pay more to get unique features your team needs, as this team did with their Slack plan. “[We’re] on Business Plus, $208.70 per user (850 Users, annual plan). It's an unadvertised tier between business and enterprise that gives some additional features, including the eDiscovery API for compliance.”

Share Quotes

Know someone else is paying less for a product than your team? Use that in negotiations—you may be able to get the same rate. Or if you have a quote from a competitor, you might be able to get it matched.

“You can definitely get them lower by getting proposals from competitors,” mentioned one team about Box pricing. Another team nearly halved their Asana bill with a competing quote: “Our initial quote was $4500/mo. ($19.95/user/mo.). We showed them a quote from Monday.com for $2800/mo. and they matched it.”

Mention Alternatives

It might not even take a quote. Just mentioning a competitor may be enough.

“We called and let them know we were going to switch to a competitor if they didn’t work with us,” said one team of their negotiation with Teamwork. Another team got 50% off their Twilio plan the same way: “We didn’t have competing quotes, but we did let them know we were looking at competitors and they came back and offered this.”

It may not always work, and most sales teams will counter by talking about their software’s unique selling points. But it can pay to stick to your guns; if this app won’t budge on pricing, perhaps take their price to their competitor to see if they can offer anything better. As investor Christopher Drake told us, “Most tools are basically the same, and if you haven't used a tool before you have no switching cost or having to learn a new system.” You’re at the best place to negotiate when you’re new to a tool.

Commit For The Long Term

Annual discounts are the easiest way to save on most software, as software vendors want to ensure you’ll continue using their software and not churn. That same idea can help you get a better discount with a longer contract. Three years seems to be the magic number. One team said they save on Workday since they “Negotiated to 3 year contract,” which is the same length that other teams got discounted contracts for Salesforce, LinkedIn Sales Navigator, and Greenhouse.

If you know your team will keep using the software, it’s worth offering to sign a longer contract. Much like your lease, you might be able to negotiate a better price for a larger total contract value.

Buy At The End of Quarter or Year

You’re not the only one who has quarterly and annual goals to meet. Sales teams want to hit their targets, and may be more willing to cut a discount to make that happen. Many software companies email reminders about their annual discounts around the end of the year, and teams who negotiated software pricing similarly recommend negotiating pricing near the end of the sales quarter or year.

“Buy at the end of the quarter,” advised a team who cut their HubSpot bill in half. “They have heavy discounts baked into their pricing model that are not hard to get approved, especially EOQ.” “[Salesforce has] super aggressive end of quarter/fiscal discounting tactics,” said another team, “so would recommend holding out for those periods.”

Similar negotiations can work whenever companies need extra sales, as one team found with Slack. “Our company with a little less than 3000 people were quoted $1 million dollars per year (~$27 per person per month). We used their free plan until they were going IPO, where they needed the sale, then lowered it to $10 per person per month.”

Suggest a Price and Deadline

The team that got a steep HubSpot discount at the end of quarter had an extra trick: “We were able to get about 50% off list in a matter of hours by just saying we would sign by the end of day (on/around Sept 29th) if they got to our price point.”

Giving a price, and say you’ll pay it now—but no later. It ups the stakes and might give you an edge in negotiation.

Hold Out

Don’t be the first to blink. You want the software, but the sales team wants the sale even more. Sometimes the savings can be dramatic if you’re willing to wait for the best offer.

“It's a function of holding still and not budging on their first few offers,” described one team who negotiated pricing down nearly a third of the original price. “DiscoverOrg quoted us $48,000 for their North American IT database, they eventually sold to us for $17,000. We eventually had them make 3 separate BAFOs before they got to that price.”

Don’t take the first offer. Hold out, and see if you can get a better deal. Delaying can work well in combination with end-of-quarter sales pressure, too, as one team found with Segment: “We dragged our feet toward the end of the financial year and they gave us 2 months free.”

Watch Your Bill

Perhaps more annoying than expensive bills are unpredictable bills. One month the electricity is cheaper than normal; the next, a heatwave comes through and your electricity bill triples. The same can easily happen with metered web services like Amazon AWS, where a burst of traffic or new signups could increase your hosting bill drastically. What’s perhaps easier to miss, but similarly budget-killing, are the smaller overages in an increasing number of apps.

Is your team using more Creative Cloud storage, Mixpanel events, New Relic events, Zapier tasks, Sendgrid emails, Twilio minutes, or other metered things than you expected? Every bit adds up. As one team related with their Datadog bill, “We were initially using $10k per month for 7 days of retentions, but consistently were getting hit with ‘overage’ charges. That would increase our bill by 20% to 40%.”

Sometimes it’s par the course. Your product is increasingly popular, and so you pay more to support more customers. All is well. Even still, there are ways to reduce your spend. If you’re consistently going over your plan, check if there you can upgrade to a higher tier that includes more of the metered resource, as official tiers often work out cheaper than per-item charges. Or, audit your usage, and see if you can save by removing inactive readers from your mailing list, removing unneeded files from shared storage, and optimizing your software to reduce server usage.

Another trick is to pay more for less. As one AWS user shared, “By signing up for the business support ($100 per month) we were able to access AWS's pool of proof of concept funds. As a result, we have been able to build out products for no cost.” That’s an extreme case, but it’s not uncommon to find unique plans that include more of what your team needs for less.

You might be able to use metered items to your advantage, too. One team sent emails infrequently enough to make MailChimp’s unlimited plans not worth it, so metered per-email pricing worked out better. “We switched to pay per send pricing and we went down from $5k a month to approx. $500,” they said.

Or at least, large overages can be another point to bring up in negotiation, as you wouldn’t be going over your plan without high-volume use.

Make Software Count

It’s not as easy as clicking Purchase and paying the sticker price. But with a bit of effort—from tiny tricks to get the most out of plans to more intensive negotiations—you can stretch your team’s software budget and enable your team to do more with less.

“Hardware needs software that makes it sing,” says designer Adam MacBeth, who worked on such hardware/software combinations as the iPod and FiftyThree Pencil. That not only true of consumer tech—it’s also true of the office equipment your team is using to build your next best thing. Get the most value out of your software, and when your team asks to add the next great new app to their toolkit, it’ll be far easier to say yes.

Click here to Tweet this article

Image Credit: Money photo by Pepi Stojanovski via Unsplash.

FORMAT WITH MARKDOWN; DRAG AND DROP IMAGES
What's the best tool for building a customized API documentation?

Let's say you have an API you want to document and you want to: - Let your users test their calls to the API thanks to a "playground" like the one on the Figma API - Be able to customize it to matc...

What's the best way to get feedback about a design or product?

Do you have a favorite survey or poll tool to get feedback, or a unique process to get actionable insights from your users about your design, product features, pricing, and more? There was an inte...

The community for power users.