Negotiating SaaS contracts can be an arduous ride without the right skills and experience. Luckily, the negotiation team at Sastrify is filled with experienced negotiators who have hammered out thousands of deals and helped customers save over $15M on software costs and the equivalent of 1.5 months of full-time work.

Through all these SaaS agreements, our experts have come away with some valuable lessons. When we asked them to share those learnings with our readers, they mostly fit into five main buckets:

Key learnings from thousands of SaaS contract negotiations

1. Prepare and focus on the process

Preparation is key for an effective software negotiation process, according to Tim Hintze, Senior SaaS Procurement Specialist. “80% of the success of your negotiation strategy lies in the preparation. Set your minimum and maximum goals, know all the facts and requirements on your side, and have everyone in the negotiation team on the same page.”

IT Buyer Hani Mattar offered more specific ways to prepare:

• Conduct market research on what competitors are offering and for what pricing
• Understand your growth plan over the next three years and use that as leverage
• Collaborate with SaaS providers and align on your growth and future plans to gain discounts based on that (instead of a one-way conversation)

Our Head of Procurement, Alex Dussurgey, explains that getting the buying process right is the most important part of the preparation for all internal stakeholders. “I've learned that process beats content in the hands of a skilled negotiator: The process is our HOW – how we manage the negotiation tactics; the approach. The content is our WHAT – what you are negotiating about; the matter at hand.” (More on this topic on our blog)

2. Communicate wisely

Always begin negotiations with proper communication on the right channels. This can lead to a better deal and better pricing, faster. But that first email sent to the vendor is crucial, says Hani. For example, “be sure to eliminate any red flag wording such as negotiations, pricing reduction, etc.”

Alex also pointed out the importance of active listening in negotiations. “Skilled negotiators appreciate that verbal communication includes listening as well as talking. It is more difficult to listen than to speak and real listening requires constant practice.” 

How can you listen better – and utilize what you’re hearing – during a SaaS agreement?

• Ask yourself “What is it that the ‘Other Party’ wants me to do, think or believe?”
• Make contrasts and comparisons, validate the evidence
• Read between the lines – determine what is not being said

3. Aim for mutual benefits, but voice your needs

“The ultimate goal of any negotiation plan should be to achieve a win-win,” says Katja Rickert, Sastrify’s Team Lead for Purchasing. “Every Account Manager has a personal motivation and underlying goals and principles. What you usually see when entering a negotiation is the tip of the iceberg. Work yourself through the layers and establish what is driving the Account Manager and how you can help them succeed as well – that way they turn into a strong ally and will act as an ambassador for you in their organization.”

At the same time, working toward a win-win outcome in SaaS agreements doesn’t mean you shouldn’t speak up for what you want. “If you don't ask, you don't get,” says Tim. “Always state your needs and goals, even if they seem ridiculous at first. They can at least serve as an anchor point from where to start further discussions.”

4. Build relationships with vendors

During a negotiation table, remember you’re talking to human beings and establishing a relationship is key. IT Buyer Irem Koroglu said this: “I've learned that connecting with your point of contact and having daily conversations helps create a human touch. In the end, it helps both sides within the whole negotiation process.”

Tim agrees. “You always negotiate with a person. Having a good vendor relationship helps a lot. I see that especially now that I work at Sastrify... In the past when I did procurement as a SaaS buyer, I spoke to a vendor a maximum of once per year on the renewal date. Now, I sometimes talk to the same AE many times for different Sastrify customers. Knowing the person you deal with and having a good relationship makes things so much easier and the outcome much better for both sides.”

We’ve seen evidence that the best SaaS agreements happen over time when you leverage these vendor relationships.

5. Get help with SaaS contract negotiations

Finally, get help with your SaaS contract negotiation tactics if you need it (and usually companies do). Without the proper knowledge, skills, processes, and experience, negotiating the best SaaS contract terms can be a huge drain on both time and money – something a lot of companies can’t afford in the current economic climate. SaaS solutions, like Sastrify, can do all the heavy lifting for your team with many added benefits.

According to Irem, “Most companies are too busy to have an organized structure of purchasing activity, which is why they need support from Sastrify – to facilitate the whole saas buying journey and keep everything under control.”

Sastrify’s dedicated team of SaaS experts can support you with your software contracts and guarantee the best negotiations so each member of your team can stay focused on what they do best.

Get a fair price on your SaaS agreements and save thousands with our free Savings Calculator.