Optimize your Software Contract Renewal negotiation process

A key part of managing software for your organization is negotiating contract renewals. This can be tricky because the wrong choices could cost your company a lot of unnecessary money. Read on to learn what you need to do before renewal and how you can negotiate the best contract.

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Successful Renewal Negotiation Process

Continue reading for a multi-vendor strategy for successful negotiations on software contract renewals.

Preparing to negotiate

First, make sure you understand the current contract.

  • Contract owner. Who at your organization is the contract owner? That person needs to be involved in the decision-making and negotiation process.
  • Renewal dates. Keeping track of dates may sound obvious but it’s easy to miss one, and that can put you at a disadvantage. Make sure to leave yourself enough time to fully evaluate your options before the renewal date.
  • Auto-renewal. Don’t be caught off guard by unexpected auto-renewals. 69% of software contracts have an auto-renew clause and a notice period for cancellation between 30 and 90 days. Be aware that the renewal term may be longer or shorter than the original contract period. But don’t worry; you can cancel your contract before it auto-renews.
  • Cancellation period. This is the time within which you can adjust or cancel the contract. Periods vary – 30 or 90 days are common – but missing the deadline means missing your opportunity to make changes.

Next, consider how the software is being used at your organization.

  • User opinions. How do the software’s users feel about the program? Are there features that slow them down or need to be added? Gathering this information serves two purposes: 1) to help you decide whether to renew or look for a new application, and 2) to find reasons to be critical and perhaps convince the vendor to lower the renewal price.
  • Utilization. Is your team using all the programs and licenses you pay for? If not, you’re throwing money down the drain.
  • Overlap. Are you paying for multiple tools that do the same things? Sometimes different departments will use different software for the same purposes, which costs you money and increases complexity. Streamline your software spend by getting rid of redundant products.
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Now take a look at the vendors you’re using

  • Multiple contracts with one vendor. If you have several contracts with the same party, you might be able to consolidate them and negotiate better pricing.
  • Benchmark data. How do you know if you’re getting the best deal? Use benchmark data to see how your contract terms and prices compare to those of other users in your industry.
  • Fiscal year end date. Do you know the end dates of your vendors’ fiscal years? You may be able to negotiate a better deal or bigger discount right before the end of their fiscal year.

Feel free to contact a Dealmaker!

Be a smart negotiator

Now that you have all the details at hand, it’s time to think about the negotiation itself. A smart negotiator will:

  • Ask for multiple pricing options. How does the price change with a contract term of one, three, or five years?
  • Negotiate the price for contract add-ons. Say your team wants to use a software package with a €10 license list price but the vendor agrees to a volume discount of €5 per license. If you need to add more users before the contract expires, will you pay €10 or €5 for each new license?
  • Listen to what the vendor isn’t saying. Try to get an idea of how far the vendor will go to keep your business. For instance, having an idea of their price floor will let you know how hard you can really push to lower the costs.

How Blackbelt XP can help

Our specialists are ready to help you optimize your software contracts and get the best features for the lowest price. Once we have worked with you to gain insights into your current situation, we can develop a roadmap and design the ideal contract with your preferred terms and conditions. Then we negotiate your contracts together. It’s simple!

You can rely on our knowledge, experience, and independent position to get you the best contract terms. Want to know more? Contact us for a no-obligation consultation.

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