In today’s uncertain and challenging economic environment, organizations are being tasked with identifying and implementing cost savings in all areas of their business. Those adept at capitalizing on this urgency are witnessing tangible enhancements in profit margins, cash flow, and overall balance sheets.
There are many ways that a business can find cost savings that can improve operational efficiency. This includes streamlining workflows, optimizing technology, improving supply chain management, energy conservation, marketing efficiency, expense tracking – and this list can go on…
Review Your Existing SaaS Contracts
One simple method to reduce costs without impacting your business in any tangible way is to review all existing contracts with vendors and assess their optimization potential.
Interestingly, within the realm of SaaS and Cloud contracts, a contract sold to one customer can be priced completely differently to another customer, even though the two contracts might be identical with the same products and usage metrics.
This inefficiency is a regular occurrence in the industry due to a lack of standardization, and the complex nature of SaaS pricing models. SaaS companies often give their sales teams A LOT of flexibility to discount and customize pricing agreements to win deals. This often gets referred to as ‘Value-based Pricing’. Where price is primarily set based on a consumer’s perceived value of the product or service to the business or the sales representative.
Therefore, when you negotiate SaaS pricing agreements the smallest details can often influence the overall price more than you think. For example:
- The salesperson you deal with. If a salesperson is behind on their sales quota, they will have a much bigger incentive to ensure that a deal materializes, and therefore, might be in a better position to yield on price.
- The time of year matters. When SaaS companies close out a quarter of their financial year, there is always pressure for as many deals to close as possible to satisfy revenue targets and ultimately the investors. Therefore, companies are often more inclined to offer special discounts in the final month of the quarter or the year.
- Comparing directly to a big competitor. In some instances, certain SaaS companies will want to make sure they don’t lose market share to their biggest rival. In such scenarios, they will create specific pricing rules internally to offer bigger discounts and custom pricing when compared to a specific competitor.
These are just a few examples of the small details that can have a significant impact on how your next SaaS pricing agreement gets set.
The Reality Looks Like The Following
Company A and Company B can have the very same technical requirement for purchasing 500 user licenses per month from a SaaS provider, ABC Technology Inc., and both their agreements run for a period of 36 months. Company A gets quoted $150,000 per year, while Company B is quoted $75,000 per year.
This type of scenario occurs due to the inefficiencies and conflicting interests in SaaS pricing models. The fact that Company A and Company B have the same technical requirements, yet Company A might pay 2 times more than Company B, is ludicrous to us.
That Is Why CloudCost Consulting Was Created.
CloudCost Consulting is specifically helping organizations optimize and get the most out of their SaaS & Cloud pricing agreements, without touching what technology you use and how you use it. We support companies entirely in negotiating their price agreements to the highest level of efficiency.
With +10 years of experience, our team comes from the world of selling and structuring SaaS Cloud agreements. We have the insights, experience, and knowledge into what and how much can be negotiated on a SaaS pricing agreement.
We operate a performance-based model, ensuring that our compensation is directly tied to the savings we assist you in realizing. Our fee is derived as a percentage of the cost reduction we help you achieve. This aligns our success with your financial benefit and ultimately makes the investment entirely risk-free.
If you feel your SaaS agreements could be optimized, or you are evaluating SaaS price agreements for a new service and you would like a second opinion, please get in touch.
