Many organizations usually take ample time in creating their cloud strategy, but often overlook the actual contract as something they need to consider in that strategy as well. That said, below are common errors organizations make in their contracts and what to do about them:
Readily Paying Upfront and Forgetting to Negotiate Discounts
Although many SaaS vendors opt for yearly agreements and upfront annual payments, savvy and practical buyers choose to pay monthly, quarterly, or in more regular cycles. If a seller wants you to pay a yearly payment up front, try and negotiate some discount that’s proportionate to your projected hurdle rate.
Including All Kinds of Support Upfront
While SaaS contracts typically bundle updates and maintenance in their subscriptions, what many organizations don’t realize is that they don’t have to purchase support up front. Refrain from buying unnecessary support because you could always purchase it later on.
Not Negotiating for Increase of Users
The majority of SaaS contracts start with a handful of users, but as usage increases, most organizations just add other users without negotiating upfront discounts, which translates to unnecessary expenses. To avoid this, make sure to negotiate discounts up front for adding users in the future.
Not Negotiating for a Decrease in Users
A crucial part of a cost-effective SaaS renewal contract management strategy is securing discounts not only for additional users but a drop in users as well. Try negotiating with your SaaS vendor by 10% to 20% per user without being fined.
Failing to Trade Reference-ability for True Success
Organizations usually agree to serve as a reference or reference-able client of a SaaS vendor before even deploying the software. However, you must only agree to act as a vendor’s reference once you determine that their service is a success. Likewise, consider if you could also request for upgrades later on since you’re already a reference-able client.
Although SaaS contracts are not always complicated, you must make certain to plan and prepare your requests in advance before meeting with SaaS vendors. Companies like Meta SaaS can also help you manage this process when it comes to renewals and utilization and pricing data when it comes to negotiations. Also, make sure to keep with the latest trends in SaaS services to make sure that you always get what you’re paying for.