What is Datadog and How Does It Work? A Guide for Businesses

SaaS Tools

Learn more about Datadog from Vendr’s purchasing experts: how it works, its pricing models, and its pros and cons compared to competitors.

Written by
Vendr Team
Published on
June 20, 2024
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Datadog is an industry giant in monitoring and observability. But is it the best fit for your team’s needs? While Datadog is an excellent option for consolidating observability functions underneath a single vendor’s umbrella, it also introduces some pricing and usage complications. 

This guide offers expertise and insight around Datadog from Vendr’s purchasing experts, including: 

  • What is Datadog? An overview.
  • How Datadog measures up against the competition.
  • 4 expert strategies to track usage on Datadog and reduce costs.

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What is Datadog? An overview

Datadog is a monitoring and security service that offers real-time visibility into an organization’s entire technology stack, including SaaS and cloud providers, automation tools, source control platforms, and databases. It can automate tasks across business units, such as monitoring infrastructure, application performance, logs, and users. 

Businesses see a few benefits from using Datadog, such as stronger collaboration between teams, accelerated time to market for applications, quicker issue resolution, and better tracking of key metrics. They also benefit from Datadog’s core features, such as dashboards, workflow automation, alert notifications, and other visualization options.

What does Datadog do?

The setup of each Datadog instance differs based on an organization’s specific needs and industry. It is mainly known for its outstanding user experience and versatility for various use cases. 

Datadog services can offer the following functionality, as needed by each customer’s use case:

  • Infrastructure monitoring.
  • Log management and analytics.
  • Application performance monitoring (APM).
  • Software composition analysis (SCA).
  • Real-user monitoring and other digital experience functions.
  • Software delivery features such as continuous testing.
  • Incident and case management.
  • Event management.

How does Datadog pricing work?

Datadog offers dozens of unique SKUs, each with a unique pricing model. For example, log management is priced per ingested or scanned GB of uncompressed data per month. By contrast, infrastructure management has three pricing tiers: free, pro (starting at $15 per host per month), and enterprise (starting at $23 per host per month). 

Check out our Datadog Buyers Guides for more information on Datadog pricing, tips on how to save on your purchase, and community insights.

How Datadog measures up against the competition

Datadog is comparable to a few other observability and cloud monitoring tools. Some of its major competitors include New Relic, Splunk, Dynatrace, AWS Cloudwatch, and LogicMonitor. Here are a few insights from Vendr’s purchasing experts that show how Datadog differs from competitors and when Datadog might or might not be the best choice for your organization.

Datadog has a more complex pricing model than most competitors

As we saw above, Datadog has a complex pricing structure. Most of its competitors, on the other hand, use a “credit model,” in which customers pay a set amount, and whichever functionality they use in the product gets consumed from this total amount.

Because Datadog offers such an expansive product set with varied pricing in each business area, different teams can use various parts of the same Datadog product and end up with varying usage and pricing models. Altogether, it becomes a complex challenge for some businesses to keep up with these pricing models. 

Most competitors are easier to negotiate with or get discounts

In addition, due to its size, Datadog is less receptive to negotiations and generally doesn’t offer discounts. Most of its competitors are in growth mode and will offer discounts as incentives to sign on with them. However, Datadog is already so large and successful that its sales team generally doesn’t offer discounts, regardless of your team’s headcount or plan size.

It’s easy to incur overages and lose track of usage with Datadog

Vendr’s purchasing experts caution that Datadog’s pricing model is prone to quickly incurring costs. While adding functionality is simple due to the platform’s seamless user interface, team members across your organization can accidentally incur overages by adding on features. 

Datadog is ideal for centralizing various functions in one vendor

Despite these factors, Datadog is often the best choice for organizations that want to centralize several observability and monitoring functions into a single platform. It can be more cost-effective than using separate vendors for each function. 

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4 expert strategies to track usage on Datadog and reduce costs

Vendr’s team of software purchasing experts have firsthand expertise and experience in dealing with Datadog’s services. They have four pieces of advice for organizations that want to use Datadog to centralize their functions in one place but don’t want to incur unexpected usage costs. 

1. Set up usage alerts

Datadog includes functionality to alert your team about plan usage. For instance, if your team pays for a billion logs a year, the team lead can set up an alert to email them when 900 million logs are reached.

2. Notify Datadog within the billing period in case of unexpected usage spikes

If you run into an accidental usage spike, you can notify the Datadog team within the current billing period. They are often flexible about waiving the extra costs. However, waiting to inform them until after the billing period means that the inquiry will have to go through a 3-6 month credit exemption process, which increases the likelihood that it will not happen successfully.

3. Use a seasonal plan if your business is seasonal

If you run a seasonal business, Vendr’s experts recommend asking the Datadog team about their “off-menu” seasonal plans. These plans enable businesses to have different commitments and usages at different times of the year, leading to as much as 40-50% savings.

4. Schedule a quarterly sync with Datadog to review usage & overage information

Lastly, Vendr’s purchasing experts recommend setting up a quarterly meeting with the Datadog team to review usage. In preparation for this meeting, it is a good idea to ask Datadog to prepare the usage information. During this time, your team can modify terms as long as you increase the total contract value by at least a penny. 

These quarterly check-ins could help if your team is running into overages for one SKU but is under-committed to another. You could use terms modifications to easily swap the spending for these two items. 

Talk to Vendr’s experts for support on purchasing Datadog

If Datadog seems like the best option for you and your team, our team can help you get the best deal. Or, if you want to dive deeper into competitors to find a better solution, we can also provide you with in-depth comparisons and negotiation recommendations.

Sign up for a free Vendr account today to simplify procurement and save on SaaS — no commitment or credit card required.

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Vendr Team
Vendr Team
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Vendr's team of SaaS and negotiation experts provide their curated insights into the latest trends in software, tool capabilities, and modern procurement strategies.

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