Understanding Your Vendor & Market Landscape – Software & Cloud Renewal Strategies

Your vendor wants you to accept the deal they present, but when you come prepared with a clear understanding of pricing structures, market trends, and industry benchmarks - you flip the script. You become the buyer they must work to retain, rather than the customer locked into their terms. 

Research Software Vendor Pricing Models 

When entering the renewal process ensure you understand how the vendor structures its pricing, including volume discounts, multi-year agreements, and additional costs for premium features. This will give you extra leverage in your negotiations. Smart buyers don’t just accept a price; they challenge it, question it, and benchmark it. 

Pay attention to Pay As You Go (PAYG) billing models which use a metric based on consumption such as per message or minute. Whilst these are offered to reduce wasted spend and gain more granular control over usage, they also present challenges. They are much more difficult to forecast, and thus budget for, and can make it easier for spend to rise unexpectedly.  

PAYG and Consumption models are often used for AI tools and products. This is an area where usage can suddenly spike due to new projects, increased usage of a solution, and/or unexpected increases in utilisation through system changes. Even where the base SaaS product is licensed via a per-user metric, AI add-ons will often be billed separately via PAYG, further complicating forecasting for renewal and negotiation purposes. 

Look Out For Software Product Updates 

Software licensing isn’t static, it evolves as publishers adopt new models and chase new revenue goals. A simple update can mean new pricing, features, or agreement type. If you’re not keeping an eye on software product changes  throughout your agreement term, you could be blindsided by price hikes or licensing shifts at renewal time. 

Be Aware Of Merger & Acquisition Activity 

The publisher you signed with last time may bear only a passing resemblance to the current publisher you’re now renewing with. If they’ve acquired new companies, expanded their product portfolio, or offloaded solutions to another software publisher, your renewal strategy must adapt. These shifts influence pricing models, support structures, and even a vendor’s willingness to negotiate.  

Benchmark Against Industry Standards 

Are you paying more than your peers? Are others securing better terms or additional benefits? By benchmarking your agreement against similar organisations in your sector, you gain insight into whether your deal is truly competitive or if there’s room to push for more. Vendors don’t always disclose their best offers upfront, but armed with industry insights, you can negotiate from a position of strength. 

Synyega’s eGuide “Preparing for Software & Cloud Renewals & Negotiations” explores the Vendor and Market Landscape more deeply and offers expert advice that will ensure your organisation achieves the best commercial and contractual agreement with all of your major contract renewals.  

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