Question

What are some tips for negotiating SaaS contracts?

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patrickh's avatar
2 years ago
  1. If you don't have an internal deadline, always wait until the end of the month or even the end of the quarter (usually Mar, Jun, Sep, Dec) to finalize your deal. Sales leaders will often give their team's extra closing tools in the form of discounts, flexible payment terms, free upgrades, etc to get the deal done.

  2. During COVID-19 sales teams are getting extra aggressive in being flexible on renewals and delayed payments for new customers. Be sure to ask for any and all things they can do to sweeten the deal and make it more attractive.

  3. If you are considering two competitive products it always works to let them know what the other one is doing to try and win the deal.

  4. One specific thing to ask for is to lock in at a lower tier you might grow out of during the contract terms - if you are signing up for a growth plan for marketing automation software and you will likely grow into the professional tier within the first 6-12 months, ask for the growth tier for your first 24 months.

7 points
zngxie's avatar
2 years ago

Patrick's post is really helpful for buying SaaS.

If you haven't seen it yet, this guide also covers all the different terms you may want to consider when negotiating: https://a16z.com/2019/07/17/16-sales-contract-clauses-to-balance-risk-and-reward/ (more from vantage point of the seller rather than the buyer).

6 points
maguay's avatar
2 years ago

A few software negotiation tips gleaned from the thousands of software pricing stories on Capiche:

  • Pay annually or longer, or at least get a longer contract. Annual plans are cheaper by default across much SaaS, and there are many examples of multi-year contracts being cheaper or at least locking in today's price versus unexpected price increases in the short term. 3 years seems to be the popular number from pricing stories on Capiche.
  • Buy more products or volume. If you're buying multiple products from the same vendor, or have a very large user base you're bringing to their product, that gives you negotiating power.
  • Share quotes from other products, mention you're still looking around.
  • Buy at the end of quarter or year, as @patrickh mentioned, when sales teams need to hit targets. That was perhaps the most common negotiating tactic among Capiche pricing data that yielded significant discounts.
  • Mention a price you're willing to pay, in a more traditional barter style, along with a date. Say you're willing to pay X if you can sign this week; the urgency may help move the discussion forward.
  • Hold out past the first offers. That, combined with negotiating near the end of a quarter, may work.

There's more detail on those and other tricks (including ways to get more out of free plans or limit how much of the software you need to pay for) in the full essay: How to negotiate software pricing.

Also, you'll find more tips on the individual software pricing pages on Capiche; Salesforce and HubSpot are good places to start as they both are high priced, have sales teams that are willing to negotiate, and a lot of Capiche community members have shared their negotiating tips for those products.

4 points
zachshakked's avatar
@zachshakked (replying to @maguay )
2 years ago

Thanks for the tips!

3 points
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