How to Negotiate SaaS Contracts

So you’re interested in software-as-a-service (SaaS) for your business? SaaS has become one of the most popular ways of delivering digital tools to employees. The average organization today juggles over 100 SaaS products across different teams throughout the year. Keeping tabs on so many SaaS contracts can quickly make users lose control of spend. Negotiating SaaS contracts is like any kind of contract negotiation process. But doing it the right way is critical to winding up with fair SaaS terms and long-term success.

You took the first step in contacting a SaaS vendor but then comes the contract agreement. While SaaS simplifies the use of corporate tools, negotiating and securing a SaaS contract with favorable pricing and terms is far from simple.

Let us walk you through every tactic you should consider when negotiating your SaaS agreement with SaaS companies.

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First Things First, What Is a SaaS Contract?

A SaaS contract usually means the supplying of packaged software that is remotely hosted and managed by a SaaS provider, also known as a vendor. In this cloud-based model, you can access the software via the web from any location. Your data is centrally stored in off-premise servers maintained by the SaaS provider. When companies undergo a digital transformation, managing, renewing, and buying software tools on a regular basis follows closely. So much doubt and so many questions are bound to come up in SaaS agreements with SaaS companies. What is the real price in the SaaS market? Is a monthly or annual SaaS subscription better? Can you stop software renewals? Is there data security?

Let us take you through the cloud of SaaS contracts negotiation.

There Is Always Room for SaaS Negotiation

Every part of a SaaS contract is negotiable, from customer data access and protection to service agreements and failures. Remember, SaaS vendors need you more than you need them. Sales reps are known to let some matters slide in order to keep you as a customer, especially with annual SaaS contracts. After all, SaaS providers have to naturally measure their revenue or data and report to investors and other stakeholders. Users are in a stronger position to ask for more and more during the SaaS contract negotiation process, including discounts, redlined contract terms, and tiered prices. Why get a good deal when you can get a great deal in your SaaS contracts.

When to Negotiate SaaS Contracts?

The earlier the better in the cloud! As it is a matter of several meetings back and forth, negotiating SaaS contracts with a sales rep takes time and energy. The earlier you start the process, the more likely you will land the deal you want for your business. Save your renewal date because this will be another window for you to negotiate SaaS and recharge your SaaS contract with better terms.

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‍--> Download Now: SaaS Negotiation Checklist

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10 Areas to Negotiate in SaaS Contracts

For many SaaS buyers, negotiating SaaS contracts can be intimidating. It can be challenging to understand which points to discuss, consider, or overlook. If you haven’t been practicing SaaS contract negotiation, risks and failures are unfortunately probable. To avoid this outcome, you have to have a real awareness of what you want and experience in negotiating SaaS contracts.

1. Software plan‍

There is no doubt your SaaS contract should clearly state the model, price, and features of your subscription. Decide if you want to pay monthly, quarterly, or annually based on the benefits that come with each one.

2. Software Pricing and Discounts‍

SaaS prices are never straightforward. Many SaaS vendors will discount up to 20% to win your business and even offer custom pricing in SaaS contracts.

3. Additional Costs‍

Extra fees can add up quickly to the initial pricing. Try to start with the base system and avoid too many customizations to functionality or integration for a lower price in the contract.

4. Software Scalability

Companies scale forward as well as backward all the time. Your SaaS contracts should match the constant change. Check if you can flexibly upgrade or downgrade if and when you need to.

5. Software Term

A commitment is a commitment in SaaS contracts. It's better to agree on a shorter period than a longer one, more than two years. If you go long-term, make sure there's an out clause in your contracts.

6. SLAs (Service Level Agreement)

A SaaS SLA presents what a customer should expect from the SaaS vendor and acts as a legal document. Most SaaS providers offer this nowadays in contracts and yours definitely should.

7. Software Renewals

Be careful of falling into renewal traps. Ask to remove the "evergreen" clause if there is one as it is an automatic renewal of your SaaS contract. Users should always have the chance to break or renegotiate the deal instead of immediate renewal.

8. Software Backups and Recovery

Continuous backup in the cloud is done by every SaaS provider but how often is the difference. Communicate with the SaaS provider if you need backup every day, every week, every month, etc for your organization.

9. Software Security

Keeping data ownership is a must for users. Your SaaS contracts should have a clause about security and even data export in case of migration and any surprises. Data protection is very critical. Nothing from your organization should be shared in the cloud or with external parties without your consent. No data breach, no risk.

10. Software Support

Having a dedicated CSM team to answer your questions in a timely manner is everything. Make sure that can be delivered, whether via the web, by email, phone, or by chat from your SaaS providers. Is it a no-brainer? It's best for your SaaS contracts to highlight that part.

7 Questions to Ask Before Signing Your SaaS Contracts

To channel your bargaining power in a SaaS contract negotiation, you must ask the right questions. New SaaS contracts can be quite confusing for any customer since they include many complicated terms. We have some strong negotiable questions that every organization should ask their vendor before signing any SaaS agreements.

1. What are the SaaS data security policies?
2. Is the software agreement scalable for all users?
3. What kind of upgrades available?
4. Which feature agreement are you getting?
5. How will renewals be in the agreement?
6. Can users try before signing an agreement?
7. Are there any hidden costs in the agreement?

How Sastrify Can Support — Switch to Autopilot

If your SaaS contracts are already in effect, it might be a good idea to use some external support. The Sastrify team puts the t in transparency in negotiations, contracts, and SaaS agreements. Get access to a platform that gives an unmatchable overview of a company’s tool stack, and keeps tabs on every single subscription along with contracts and other documents. Besides a ready-to-use platform, our team of procurement experts has years and years of experience in negotiating SaaS contracts.

Do you need SaaS support? By relying on us for analysis, monitoring, and negotiating SaaS agreement, the team can focus on other important tasks that better fit their expertise. Your team can start the SaaS contract negotiation process early and schedule a call with a Sastrify agent now. Our team is here for your next SaaS agreement with unmatchable discounts. Anything is negotiable with Sastrify, schedule a call.