Enterprises have historically found it difficult to achieve savings on Salesforce.com (SFDC) purchases and renewals. This has largely been attributed to the vendor’s strong market leadership (thus leverage), cultish following, and impressive ability to lock in and expand its footprint in the enterprise. As a result, firm (and reasonably consistent) pricing and inflexibility at the negotiation table have been hallmarks of a SFDC purchase or renewal.
But things are changing. NPI is seeing greater pricing disparity among the SFDC deals it reviews. Above fair market value pricing and subpar discounts for new and add-on purchases, as well as implementation services, are trending. While this is bad news for many customers, it’s an opportunity for savings for those customers that come to the negotiation table prepared.
Benchmark pricing and discounts. While deal pricing from Salesforce.com has historically been fair, don’t assume you will continue to get a fair deal. Benchmark to ensure pricing is competitive.
Don’t assume growth assumptions are accurate. Just as important as base pricing are SFDC’s quantity growth assumptions and any unit price increases. NPI recommends strongly challenging any growth assumptions if they don’t match actual expected usage and proposed price increases depending on the length of the term.
Bring competitive solutions to the table. It may be difficult to position feasible alternatives to SFDC’s main CRM products, but other areas like Social Studio and Marketing products have real competition in the marketplace. Explore credible alternatives and deployment scenarios to apply leverage on SFDC during negotiations.
Cap renewal increases. Cap renewal increases. SFDC is notorious for price hikes at the end of any term. Be sure to cap increases during initial purchases to protect your business from this cost exposure at the end of your current agreement.
Shop third-party implementation providers. There is no shortage of Salesforce.com implementation partners and pricing is all over the map. They’re highly motivated to win your business, especially when competitive pressure is applied.
Inspect usage and optimize subscriptions accordingly. Companies often buy full-use licenses for users who would be better suited for a lower license profile. Define your unique usage requirements and align license types accordingly.
Don’t overbuy support, and explore third-party alternatives. Not every SFDC customer needs premier support. In fact, many find their needs can be met with a lower tier of support services. In some cases, customers have utilized third-party support providers to provide comparable levels of service at a much lower price. Map your support requirements to SFDC’s available programs, and always explore alternatives to premium options.
Identify potential areas of unanticipated cost and monitor closely. SFDC is eager to monetize all monitored inputs into its offerings. This includes stored data, number of objects, number of tabs and fields, etc. Unfortunately, customers often overlook this area of SFDC costs leading to unanticipated five- and six-figure expenses.
Time purchases wisely. SFDC operates on a fiscal calendar that ends in January. The pressure on SFDC reps to close deals by end of year or quarter varies from rep to rep. With this in mind, customers should sniff out how timing impacts their unique purchase/renewal event and act accordingly.
NPI helps companies achieve material savings on SFDC purchases and renewals. Our IT price benchmark analysis, licensing/subscription optimization and negotiation intel services help clients achieve savings like this: