Software Contract Solutions

Negotiating SaaS Contracts With Confidence

Most businesses extensively use SaaS products to automate their day-to-day operations. However, not everyone is aware of SaaS contract negotiation tactics. Outside of the obvious regarding pricing, software negotiation tactics can help negotiate warranties, better support facilities, limitations of liability, and other relevant contractual clauses. If the concept of a SaaS negotiation process is new to you and you’re looking for tips and strategies for negotiating your SaaS agreements, you’re in the right place.

In this blog, we’ll cover the key areas your procurement team and other stakeholders involved in the SaaS agreement process should pay close attention to.

Questions to ask while negotiating SaaS contracts

In order to gain a competitive edge in the negotiation process, it’s best to have a clear idea of your priorities. This will help you present a better case while negotiating SaaS contracts, but also show your SaaS providers that you’ve done your homework. Ask these questions to help you identify any potential red flags in software license agreements.

  • Access rights and users
    • What defines a user and how many users get access?
  • Is the scope of the license well defined in the contract?
    • Are any rights to the SaaS application transferrable; if so, what are they?
  • How is the pricing represented in the agreement?
    • What is the annual expense incurred when all revenue streams are included?
    • Are there any other chances of additional fees in the future; if so, what are they?
  • Does the agreement cover any performance requirement set forth by the organization?
    • This could include an uptime guarantee, API integrations, support response times, and more.
  • What’s the preferred type of license?
    • Does this SaaS vendor offer a multi-year or single-year license?
    • How will the term license be renewed at the end of the term?

Key areas to negotiate in SaaS agreements

Although SaaS agreements don’t have lock-in periods, they do have their own fair share of challenges, like contract renewals and SaaS contract management. We’ll walk you through some of the key value levers you can use to support your negotiation conversations with your suppliers.

  • Pricing – many buyers aren’t aware of the fact that they can buy SaaS for less. Here’s some advice that can help you negotiate the pricing of your SaaS purchases like an expert.
    • Putting off your software purchases until the last minute gives you little to no leeway to negotiate – start early.
    • To find similar products for less cost, do a feature-wise comparison, and use them as leverage in your negotiation.
      • Identify a list of features that you can do without, look for support options that you won’t need, and use them to negotiate a better agreement.
    • If applicable, try negotiating for a multi-year contract, which will give you the opportunity to negotiate lower rates.
      • Keep your expansion plans and future users in mind when you negotiate the pricing.
  • Renewals – start negotiating SaaS contracts at least a quarter in advance for yearly contracts, and a year in advance for multi-year agreements.
    • Be prepared, SaaS service providers will be looking forward to pitching new solutions and upselling opportunities that maximize their revenue.
  • Support – in addition to traditional support, support also includes the delivery of software updates and continued maintenance of the SaaS platform.
    • Organizations need to carefully read the support services clause to ensure there aren’t limitations to these services, and that they don’t incur additional charges for availing them.
    • Always take the time to review the quality of support that you’re bound to receive. If the product is bound to be a critical solution for your organization, negotiate for dedicated support staff like account managers.
  • Warranties – warranties are a frequently overlooked clause in the SaaS agreement. Normally, warranties cover instances like performance hiccups, infringement issues, and cybersecurity measures. Look for nuances such as limitations in the case of a breach.
  • Limitation of liability – a limitation of liability clause helps your suppliers put a cap on the monetary value or eliminate the associated risk altogether. Make sure that there’s at least a small cap on the amount of direct damages made to the product. While negotiating SaaS contracts, you can also ask for a higher cap on liabilities like data breach.

Leave the Negotiations to Us

Even with the help of sought-after law firms, SaaS negotiations may appear elusive. You need a rock-solid negotiation expert by your side. Hiring a negotiation expert in a competitive market is easier said than done. If you’re on the search for SaaS negotiation experts who can take the task of SaaS contract negotiations expertise off your plate, contact SCS today. We can help you stay on top of your contracts, renewals, and get the best deal with 20+ years of analytic pricing data.

IT Benchmarking Metrics – Assessing Fair Market Value for Purchases

Overpaying for enterprise software, cloud infrastructure, hardware and IT services is all too common. Unfortunately, inconsistencies in market pricing can make it difficult for buyers to determine whether a vendor’s pricing is within fair market value range. In this blog, we’ll discuss the importance of assessing fair market value pricing for enterprise IT purchases. We’ll … Read more

Supplier Relationship Management Software: Where to Start

True or false: procurement and supply chain management is all about cost. False. Yes, cost is a driving factor. But procurement and supply chain teams today are focused more on overall value than cost. Value means a lot of different things to a lot of different people. For leading organizations though, value is often determined … Read more

Log4j flaw: Nearly half of corporate networks have been targeted by attackers trying to use this vulnerability

Cybersecurity researchers warn on the growing pace of scans and attempted attacks looking to exploit the Java logging library security flaw. The number of attacks aiming to take advantage of the recently disclosed security flaw in the Log4j2 Java logging library continues to grow. The vulnerability (CVE-2021-44228) was publicly disclosed on December 9 and enables remote code … Read more

How to choose a cloud data warehouse

Modern data warehouses can query structured data and semi-structured data simultaneously, and even combine historical data and streaming live data for analysis. Enterprise data warehouses, or EDWs, are unified databases for all historical data across an enterprise, optimized for analytics. These days, organizations implementing data warehouses often consider creating the data warehouse in the cloud … Read more

CISA releases advisory on five Apache HTTP server vulnerabilities affecting Cisco products

The government agency urged administrators to review Cisco’s advisory and apply the necessary updates. CISA has released a second advisory about several Apache HTTP server vulnerabilities. Cisco sent out a notice about the vulnerabilities in November, explaining that the Apache Software Foundation disclosed five vulnerabilities affecting the Apache HTTP Server (httpd) 2.4.48 and earlier releases on September 16. The IDs are … Read more

Microsoft to try to push business customers to longer-term subscriptions via price increases

Microsoft is gearing up to make billing changes around subscriptions for a number of its business software services that could have negative effects on partners and customers. Earlier this year, Microsoft officials disclosed what they called their first “substantive” price increase in over a decade for commercial Office/Microsoft 365 plans that would be coming in March 2022. … Read more

Windows 11 adoption nears 9%, but businesses are waiting

Data on the adoption of Microsoft’s newest OS shows uptake ranging from 1% to 9%. But most enterprises will likely wait until at least 2023 before broadly rolling out Windows 11. How fast is Windows 11 being adopted by users? The answer appears to be “hardly at all” to “slowly,” depending on which set of … Read more

How to buy hyperconverged infrastructure: What to ask before investing in HCI

HCI purchases start with deciding software vs. appliance and considering scalability, orchestration capabilities, and cloud compatibility to narrow the options. The traditional data center is built on a three-tier infrastructure with discreet blocks of compute, storage and network resources allocated to support specific applications. In a hyperconverged infrastructure (HCI), the three tiers are combined into a single building block called a node. Multiple nodes can be clustered together to form a pool of resources … Read more

How to repair Windows 10 (and 11) in 4 steps

When Windows 10 gets wonky, try this series of repair techniques — in this order — to attempt to set things right. Sometimes a Windows 10 system starts misbehaving to the point where repair is needed. This often takes the form of worsening performance or stability, and can originate from damage to, loss of, or … Read more