Intro:
CRMs are one of the “stickiest” technologies a company can implement. Salesforce takes that a step further as normally it operates as a “Client 360” and probably supports more teams within your organization than only sales and marketing. This means that once you’re on the platform, it’s very expensive, time consuming and risky, to exit a Salesforce contract.
If you’re curious how much an implementation or migration can cost check out this article or send us a message.
Salesforce knows this and uses it to their advantage at renewal time. They almost never offer pricing concessions for the same, or less product. That being said here is a step by step guide on how to renew Salesforce for maximum savings.
Pro Tip:
If you are a NET NEW Salesforce customer, then you have a lot more negotiation power! However, for those of us who are existing clients, this is how you can optimize your renewal to save money. Please reach out to us via our web form if you would like to know what price you should pay for your specific net new purchase.
Prepare and research in advance.
You shouldn’t be in a rush to decide which products you need, and the ideal duration of a contract come renewal time. Plan with stakeholders 6 months in advance of renewal what role Salesforce will play in your companies corporate strategy. By understanding how critical it is to your road map, will dictate how much negotiation pressure to apply.
Price benchmarking - Have an idea of which product skews cost what. Talk to your competitors, a pricing tool/consultancy like ourselves, or even reddit for information. It’s critical for budgeting and planning knowing what potential discounts may be in advance.
Be aware of the 1-month no-changes Salesforce contract clause. Most contracts allow for changes 30 days in advance, and only renewal of the existing products less than that, although this is also semi-negotiable, provided you engage early.
Engage your account team early.
You want to create genuine doubt that you will renew. This will increase your negotiation position. Some ways to do this are:
Cancel your contracts auto-renew clause with your AE or renewals manager.
Inform the account team that you are exploring alternative solutions, highlighting the specific technical issues causing difficulties, and emphasize pricing as a significant obstacle. These are typical factors to consider for any important renewal.
At the very least, you'll be offered a number of free calls with solution experts, solutions engineers, and if you're upmarket, industry experts. These calls can be a great way to uncover new opportunities to use the tool, as well as fix existing issues without paying expensive consulting fees.
Negotiate. Now that you've created a narrative that your business is by no means a sure thing, here is what's negotiable and what's not, without saying "we will cancel if you can't meet XYZ price".
You CAN negotiate for:
A reduction of your uplift or offered price. Here's how:
Salesforce has been pushing a ~9% uplift on most contracts from SB to MM. This is easily one of the hardest uplifts in the industry to avoid, but here’s what can work.
Extend the contract duration beyond one year, even by 6 additional months. This may reduce your uplift by 2-5%.
Save any product/user add-ons for renewal time. Salesforce is mostly concerned about increasing ACV. If you need new users or features anyway, offer to replace the uplift costs with a few users or a new feature you needed anyway. This is almost always better than an uplift as you can sometimes in the future go back and remove these trial products and maintain your low user price.
Salesforce Office in Chicago A better per-user price, when adding a material net new number of users or product. A general rule of thumb is that if you are increasing your overall contract value by 30% or more, you should be able to achieve superior per-user pricing at renewal (or a new contract via early renewal). For example, if you have 100 users and you’re looking to add 30 users, not only should the new users come at a much lower price than the previous 100, but you should also be able to roll all 130 users into an overall lower per-user price. Clients forgetting to negotiate their per-user pricing strategy when adding users is the most common missed savings in the Salesforce ecosystem, besides paying too much on their initial contract.
A genuine technical or business challenge preventing you from increasing pricing. For example, if your company is being acquired, going through major layoffs, or restructuring, this may resonate well with the account team if it’s true, and the business is at risk from economic factors.
Furthermore, if there has been a major technical mistake by Salesforce, or a consulting partner Salesforce suggested, this can be a major negotiation lever. For example, if you lost data, had an implementation go 2-3 times over time and costs, or can trace an email conversation back to something you were promised but never received, this can drive pricing concessions.
Leverage comparable market (competitor) pricing to your advantage. We've provided sample data below but please reach out to us for a complete Salesforce pricing comparable benchmark.
Technical support.
Salesforce has an army of industry and solution specialists they can bring to help your organization. Although they may not do system changes on your behalf, they can walk you through solutions and technical issues. You have more leverage here in advance of a renewal or add-on. This is not to be confused with purchasing Salesforce premier support. Please reach out if you have specific product questions.
Free events
You may have to submit to a testimonial or even speak at a Dreamforce/client event. However, good clients and prospects can often receive free tickets to games, events, wine tastings, or fancy dinners. It is worth asking about if employees are interested in this free benefit. They have scaled back T&E in recent years.
Improved pricing protections and billing terms.
If your organization values the time value of money or cash flow, over pure tax write-offs, for example, you may wish to request quarterly or semi-annual billing. These are not always a given, however, one of the easier terms to request.
When you move upmarket to the mid-market or enterprise level, you'll also be able to request uplift caps beyond your contract length. This may not always be possible at the small business level, but it never hurts to ask!
You will have a very hard time negotiating for:
A pure reduction in contract value, while maintaining the same level of product.
A significant reduction in users and product, while expecting the same per user pricing.
Specific account history factors can sometimes influence this, please reach out.
Good Pricing Example:
Bad Pricing Example:
If you’re curious about pricing bands and where you stand in relation to the market, please send us a message and we’ll be happy to assist.
For example at the 50 user mark.
You may expect to be in the 25-60% off Sales/service cloud list price.
For non-core products such as addons and marketing you should expect to be in the 35-80% off range.
This depends on many factors, however a good rule of thumb is that discounts on non core products should be much higher. Obviously there is a huge range, thus why we exist as a service to help you optimize.
Advanced Strategy:
Being stuck with a poor per-user price can cause significant year-over-year compounding and increasing costs. If you’re considering an evaluation of other tools and your business doesn’t depend on Salesforce for critical functions, consider reducing to a token number of users for 6 months to a year to retain your data and customizations. Then come back with an informed larger purchase at a top 10% lowest per-user price. This will save you thousands of dollars over the years.
Now that you know what’s on the table from a negotiation perspective it’s time to optimize your product stack, and usage.
4. Optimize your usage and adoption.
Many of our clients have changing needs at renewal time. Some are expanding, while others are reducing their Salesforce footprint. We've covered how to minimize pricing; now let's discuss how to optimize your value.
Product swaps. Salesforce will normally allow you to swap products around at similar costs. For example, if you're not using a marketing tool but need more users, or if you're not using a full sandbox but want to try out sales automations, you can request a swap.
User adoption. With proper research, you'll find that usage rates are significantly higher among power users. If an employee logs into a high-priced platform once a week or less, perhaps there's an opportunity to remove the user or add training to increase their usage and value from the tool.
Dormant users and products are often overlooked by many companies. They may have unassigned licenses, purchased products they are not using, or have not implemented yet. A good example of this is Marketing Cloud, Premiere Support, or Sales Engagement. Often, these are included at a huge discount in sales cycles, yet they are never fully adopted or implemented. By requesting the removal of these from your renewal, you may face uplift fees on a per-user basis. However, the cost savings from reducing products will often far outweigh the costs of having unused products.
5. Minimize 3rd party and external costs.
Salesforce license fees are often only 50% or less of the total cost of Salesforce ownership. It’s an ongoing beast that requires close attention for the best outcomes. Negotiating and evaluating the necessity of 3rd-party consultants, or internal hires, should be considered and negotiated.
Please reach out to us if you have any questions on this topic as costs can add up fast!
Conclusion
Although there are specific nuances of what you can and can’t negotiate on your Salesforce contract at renewal time, a simplified approach is:
Plan, Research, Negotiate, Optimize, and Adopt.
A key part of planning and negotiation is understanding where your specific contract and organization size should fall in Salesforce’s pricing structure. If you’d like to know more about how your pricing compares to the market and how you can improve it, please send us a message.
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