When your department identifies a business need, the first instinct is to do some research and find out who’s who in the space. Within a few minutes of reading websites and digging for pricing info, you quickly realize the process is time-consuming (and overwhelming). Pricing information is often gated. Service tiers and feature lists can leave you with more questions than answers. Enterprise information often just leads to the dreaded “let’s chat” button.
Why’s it gotta be so hard?
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While many stakeholders yearn for a one-and-done way to down-select a vendor and get on with things, the truth is that SaaS buying is a nuanced endeavor. Tiered services, consumption-based features, compatibility, and scalability all play a role in what solution is best. All of that happens before you find out what it will all cost.
It’s a big task, and the landscape is always changing. This is where a knowledgeable buying partner like Vendr and access to buying data can make a big difference in both your selection and the price of your chosen solution. While we can’t make the selection for you, we can light the way for you in terms of selection and negotiation.
Why “A or B” software buying decisions are tough
It’s no secret that the explosion of SaaS software over the past decade has created a world of choice for buyers. If you can dream it, there’s a piece of software out there that can do it.
The other side of that coin: the growing complexity of SaaS solutions, use cases, and integration.
In most cases, you can’t simply Google a comparison grid featuring your exact use case and top three suppliers. There are too many moving parts. Many aspects of your organization and your chosen solution will need to align in order to achieve the best outcome.
Optimal fit is probably the biggest obstacle to a “quick-fix” SaaS buying process. Your chosen solution will need to jump some critical hurdles in order to be effective. The most important questions to ask when looking at a supplier:
- Can this solution fit our intended use case? Will it solve the major pain points in our current process?
- Does the solution integrate well with our current technology and other solutions? If there are gaps, is the supplier able to offer a custom solution?
- Will the solution scale to meet our needs over time? How long can we depend on this piece of software to do the job?
- How adaptable is the solution to potential future changes?
- Will our team be able to step into this solution easily? If not, what training is required to get everyone up and running?
- Will our security and IT teams sign off on purchasing the software? What guarantees should the solution make in terms of network security, data protection, and uptime?
Once you’ve identified a few solutions that can meet your needs, it’s time to talk price. Just like feature comparison, many variables will influence the outcome of price negotiations. The most common among these include:
- Company size
- Expected consumption
- License or seat count
- First-year discounting
- Time of year
- End of quarter
Some of these variables are within your control. For instance, you may be able to plan purchases to take advantage of optimal leverage. In other areas, it may not be within your ability (or your sales rep’s) to influence the deal or pull certain levers to improve the price.
Knowing the variability in play and understanding what’s at stake makes a big difference in the selection and negotiation process once it’s time to pull in your buying partner. While we don’t point to just one solution and proclaim, “that one,” there are areas where we improve your process and outcome.
How Vendr helps companies evaluate SaaS software
When selecting a solution, it’s important to understand how all the puzzle pieces fit together. It helps to have someone in your corner. Vendr’s Executive Buyer and CSM teams help customers looking for guidance, whether during the selection process or price negotiations. Below you’ll find the negotiation levers we use.
Advising on possibilities
Negotiating and reviewing contracts on behalf of buyers and suppliers gives us a unique perspective on pricing. In our experience, the variability of SaaS pricing leaves room for up to 25% savings on your tech stack.
Using data from thousands of deals, Executive Buyers help companies contextualize the information and understand what’s achievable for your company size, logo, and usage. Our data and insights are used for directional guidance, the growth of the contract, competitive landscape, runway, and willingness to make the renewal competitive all to ensure the best possible outcome.
Understanding how these factors influence price can help you negotiate confidently and arrive at the best possible price that meets your expectations and leaves nothing on the table.
Not sure what’s out there? We can suggest possible suppliers to include in your search. We advise all of our customers to follow the three bids and a buy approach, meaning getting at least three vendors to bid before signing a contract. In general, it’s bad practice to buy anything new without it being competitive.
Referencing our thousands of negotiations and customer experiences, we enable companies with real-world knowledge (based on those of a similar size, use case, growth trajectory, etc.) on many of the SaaS software options on the market.
Pointing out SaaS buying best practices
We also advise on common negotiation pitfalls or weak spots in contracts in order to strengthen your leverage when you buy SaaS software. Some of the common issues we see when purchasing software:
Bundling: The practice of bundling together software options in order to achieve desired discounts may seem beneficial at face value. However, this practice leaves potential to purchase a bigger solution than your team or company really needs. While seeking out a best-in-class solution isn’t a bad thing, buying more software than you need inflates budgets over time without delivering an optimal outcome.
Our best practice recommendation is to always ask for an itemized list of the solutions and prices attached to them. You may find that, when itemized, bundling will cause redundancies in your tech stack or there are aspects that don’t apply to your use case.
One-shot discounts: Everyone loves to get some money off the top of a deal, but it pays to consider how buying on a deep, single-year discount will affect the long-term budget. Contract periods end. At that point, will finance still approve a newly-revised budget for a much higher number than originally negotiated? Every situation is different here, but considering the long-term implications of up-front discounts is an important point in evaluation.
Consumption-based pricing: While there are cases where consumption will remain steady over time, a consumption-based pricing model opens the possibility of higher costs over subsequent years of the contract. For high-growth companies that expect to scale over the life of the contract, consumption-based pricing models effectively punish you for that success.
Multi-year pricing: This is a tricky one. While multi-year contracts are a common way to save money, it’s important to carefully consider these arrangements. For new suppliers to your tech stack, a multi-year deal may save you money in the short term. However, it commits you to the software for two, three, or even five years. If your needs change, or if real-world use doesn’t align with what you anticipate, you could be stuck with an expensive piece of shelfware.
Evaluating software is daunting – not only do you need to consider what solution best solves today's problem, but you also need to balance that out with long-term goals and growth.
Then again, as Industrial Engineer Allen F. Morgenstern said, "work smarter, not harder."
With the right SaaS buying team and data by your side, evaluating and implementing new software can happen in much less time, without the added stress.