Strategies To Reduce Your Salesforce Licensing Cost Structure
What is Salesforce’s Licensing Cost Structure?
Salesforce does not have a single set price, which can be frustrating to figure out how much negotiation room you have to bring down your overall spend. However, this also offers pricing flexibility that may be advantageous to clients in the long run as your organization scales.
Salesforce’s approach or business model is to start small, earn customers’ trust, and then grow within the business. They frequently offer exceptionally low introductory rates to attract potential clients away from competitors, and offer even steeper discounts if you bundle multiple product needs together. However, you will need to renegotiate this discount at each contract renewal, and if you change elements of your contract in between renewals you will want to consider renegotiating your level of discounts. Here are the main factors that give you more or less ability to negotiate your licensing costs:
- Addition / reduction in license counts
- Purchasing new products or discontinuing the use of a specific product
- The length of contract
Strategies To Reduce Costs
1. Negotiate Renewal Price Protections
It’s common for new customers to prioritize securing the best upfront price, but they often overlook the potential to re-negotiate pricing at renewal. Start speaking with your Salesforce account executive 3-4 months prior to renewal to see what discounts you qualify for especially considering any changes to the (3) levers bulleted above.
2. Purchase Only What You Currently Require
Salesforce offers steep discounts to customers that some times lead to buying more than what they can use at the time of purchase. It’s important to ask yourself if you truly need all the features included in an all-inclusive bundle or Unlimited Edition. Would a less comprehensive option, or less license be adequate for your current needs? Upgrading later during renewal may be an option, potentially allowing for a better discount when it aligns with your organization’s requirements.
If you have guaranteed growth within your organization you can pre-negotiate volume discounts and / or agree to purchase a larger amount of licenses at set points in the future. This might allow you to lock in a discount now without taken on the financial burden of purchasing licenses that will sit on the shelf for months.
3. Negotiate The Price of Add-Ons
A significant number of customers are unaware that they have the option to negotiate the price of their add-ons, resulting in a potential reduction in their overall Salesforce expenses. Negotiate and advocate for your organization’s needs while keeping in mind that Salesforce is often willing to work with customers to reach a mutually beneficial agreement.
Let’s say you’re interested in purchasing Pardot for marketing automation, but the listed price is higher than your budget allows. Start by researching the fair market value for this add-on and similar options from third-party vendors. Next, speak with your Salesforce account executive and explain your budget constraints and the importance of receiving a reasonable price. If an add-on in volume of licenses happens and it’s expected to be a reoccurring need after you have already signed a new contract, you should consider speaking with your account executive about re-negotiating a volume price discount.
Certain unforeseen costs may increase due to lack of knowledge when purchasing or alignment issues across your organization. It is possible to sign a contract and learn afterward that your agreement is limited or that you require additional functions to keep your organization operating efficiently. Additionally, as time goes on, your organization’s needs may change, and you might find that you need more than you initially estimated. You might also find that you don’t need products that you purchased that you are locked into a contract term for.
For example, accounting for the cost of service and support is often overlooked, but it’s incredibly important as you will most likely need assistance setting up Salesforce, making sure the configuration is correct, and instructing your team. To make sure you are getting the most out of your investment, you might also need regular help and consulting. Another important, but usually overlooked cost, is data limits. Depending on the edition you have purchased, Salesforce will place a restriction on the amount of data and file storage you have. Your system will amass lots of data over time and you might reach your data cap as a result of this.
How We Can Help
Although pricing and upfront discounts are crucial factors in maximizing the value of your Salesforce investment, other aspects such as price renewal protections, current needs, and add-ons should not be overlooked. To achieve a strategic partnership with Salesforce, it’s vital to find a harmony between these factors. If you are prepared to adopt a more strategic approach to your Salesforce costs/relationships please contact us today to explore how we can assist you.
Discuss your Salesforce needs on a free 30 minute consultation