The 9-step software renewal checklist
Use this 9-step software renewal checklist to build consistency into your renewals process, identify areas for improvement, and negotiate better contracts.
Software renewals are an opportunity to review your goals, needs, and expectations—and to determine the best path forward for your company.
The software renewal process allows you to renegotiate your contract for more favorable or suitable terms or to get out of an agreement that no longer works for your organization.
Learn how to approach software renewals with our nine-step checklist.
Software renewal checklist: 9 steps to renewing software licenses
When a software agreement comes up for renewal, you have a few paths forward:
- End the agreement, find a new vendor, or remove that software category from your tech stack
- Renew the contract without any changes
- Renegotiate the terms of the agreement before renewing
The following nine-step process helps you determine which pathway to take in any given renewal scenario and prepares you for renegotiation conversations should you decide to renew.
1. Review your current license utilization
Begin by conducting a thorough analysis of your current usage.
Software licenses may be unused or underutilized—for example, when an employee never accesses the software platform or if a given user only logs in once every few months.
Analyzing current utilization gives you a baseline understanding of how your license entitlement stacks up to actual usage. If you’re paying for 100 licenses but only have 55 monthly active users, you might consider dropping your total user seats down in the upcoming renewal.
From there, look at how each license is being used. Are there any features or functions that are used most often or aren’t used at all?
Compare this feature adoption to your entitlement as well, and consider the possibility of dropping down to a lower-priced plan.
Most SaaS products are sold on a tiered-pricing model, with more expensive plans including additional or advanced features. If you no longer require these features, you may be able to reduce your overall expenditure.
2. Consider your available upgrade options
The opposite is also worth considering: Are there any features you wish you had access to that would make your job easier?
And, if so, which of these are available in a higher-priced tier?
This consideration may influence your decision to upgrade as part of your renewal, though it may also identify a need to reassess other suppliers. If a feature you need isn’t offered by any of your current vendor’s pricing plans, you might consider switching suppliers.
3. Audit your support logs
Look into the tickets you’ve logged with the vendor’s support team and analyze:
- How often you’re requesting technical support
- How quickly problems are resolved
- Whether any issues remain unresolved
- Your contentedness with the quality of communication
Use this information to guide your renewal decision.
If a number of tickets remain unresolved or you’re unhappy with the level of service you’ve been receiving, this may be a tick in the “find a new vendor” column.
However, your service-level agreement may be a point upon which you can negotiate during a renewal conversation.
4. Analyze your purchasing status
Review how you’re currently purchasing from this vendor and establish whether this still fits your procurement needs or if you might consider renegotiating terms.
Say, for example, you’re paying for your sales CRM platform on a monthly basis.
This monthly payment cadence might have been appropriate when you first signed the agreement, as cash flow was limited.
Now that your company is more established, an annual payment term might be realistic and could allow you to take advantage of a discount offered by the vendor.
5. Re-read your existing contract
As your renewal date approaches, take the opportunity to thoroughly read through your existing software contract.
Look for terms that perhaps no longer apply to your organization or that might restrict your usage in the future.
For example, you may identify that your marketing automation platform contract enforces a maximum contact list size of 100,000 subscribers, after which you’ll be charged overage fees.
This wasn’t such an issue when you signed on with a list of 10,000 subscribers, but now that you’re sitting at 85,000, it's a restriction that could limit growth (or cause excessive spending).
Look for clauses like this and highlight any required changes in your renewal negotiation conversation.
6. Assess current pricing competitiveness
Software license renewal is the perfect opportunity to assess whether you’re still getting a good deal or if the market has shifted since you originally signed the agreement.
Over the course of a three-year contract, markets can quickly become saturated with new competitors, driving pricing down. You may find that your once-competitive agreement is now not so cost-effective.
Engage in the process of market analysis, noting any vendors who might also be suitable and reviewing their pricing model against your current agreement. You can also work with a Vendr Executive Buyer to be sure that you have all the most accurate price benchmarks.
Then, use this information to inform your decision to renew. It might drive you to assess other vendors, or you may use this pricing analysis to fuel your renewal negotiations.
Bear in mind, too, the impact of switching vendors when assessing pricing. Though an alternative service provider might advertise a similar offering for 5 percent less, the costs and headaches involved with switching software platforms might make the change unrealistic.
7. Reassess your current needs for the software
Before you agree to a contract renewal, it’s important to assess your current business needs against the service level you’re currently receiving.
The first question to ask is, “Do we still need this?".
You might, for example, be using a time-tracking tool to monitor spending on freelance contractors. However, since signing the original contract, you’ve started using a project management platform, which also offers a time-tracking feature.
In this case, you can avoid a renewal and consolidate your costs.
If, however, you still need the tool, consider your more specific requirements as they relate to the product’s features.
Which functions do you require? Which do you have access to that you no longer need? Which do you not have access to that you wish you did?
The answers to these questions will help you determine whether a plan upgrade or downgrade might be appropriate.
8. Consider future growth initiatives and other changes
Before renewing any license agreements, consider how your current growth initiatives and other company changes might impact your decision to renew.
Say, for instance, your company plans to invest heavily in an inside sales team next quarter, doubling your user requirement for your sales engagement tool.
Having this information in mind will help you negotiate a more appropriate contract whereby you could potentially receive a lower price per seat.
9. Prepare for renewal negotiations
At this point, you’ll be able to determine whether or not you’d like to renew the contract.
If you are renewing, consider how you might negotiate a better deal for the new agreement.
Conversation points you can use to drive the negotiation include:
- Upgrading to a higher-tiered plan
- Upping your user count
- Past issues with customer support
- Pricing competitiveness (based on your market analysis)
- Changes in purchasing style (monthly/quarterly/annual)
Become a pro at software contract negotiations in our guide: Software negotiation strategies: Best practices from over 300M in SaaS.
Get Vendr on your side for more effective software renewals
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Automated renewal notifications mean you’ll never miss a negotiation opportunity again, and our team of SaaS buying experts will work with you to hammer out the best terms possible.
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