Negotiating Hybrid Salesforce Licensing Summary
- Assess User Needs: Map different roles to the right license.
- Bundle Licenses: Mix license types to negotiate better rates.
- Scalability: Negotiate the ability to scale licenses as needed.
- Timing: Negotiate near the end of a fiscal quarter for better terms.
- Flexibility: Ensure contracts allow easy conversion between license types.
Negotiating Hybrid Salesforce Licensing Options
Salesforce is a powerful CRM tool that has become the go-to platform for companies looking to improve sales, customer service, and overall business management.
However, as businesses grow and evolve, Salesforce licensing can become a complex and potentially expensive part of IT spending. Hybrid licensing—where different types of Salesforce licenses are used together to optimize costs and functionality—has emerged as a practical solution for many organizations.
This article provides a complete guide on negotiating hybrid Salesforce licensing options, helping you make informed decisions that balance your company’s needs with budget considerations.
What Is Hybrid Salesforce Licensing?
Hybrid Salesforce licensing refers to using a mix of different Salesforce license types to meet the specific needs of various users across an organization. Instead of a one-size-fits-all approach, hybrid licensing allows companies to assign the most appropriate license to each role or user based on their access and functionality requirements.
For example, you may assign Full User Licenses to your sales and customer service teams while opting for Platform or Limited-Use Licenses for employees who need less extensive features. This mix-and-match strategy helps organizations control costs while ensuring every user has the right tools for their job.
Why Consider Hybrid Salesforce Licensing?
Adopting a hybrid approach to Salesforce licensing offers several benefits:
- Cost Optimization: By avoiding over-licensing, you ensure that users only have access to what they need, reducing unnecessary expenses.
- Flexibility: Hybrid licensing provides flexibility for organizations with diverse teams and varying Salesforce access needs.
- Scalability: As your business grows, hybrid licensing can accommodate different access levels, making it easier to scale up or down as needed.
- Better Alignment: Hybrid licensing aligns with each department’s specific needs, providing full capabilities to power users while reducing costs for less frequent users.
Salesforce License Types for Hybrid Licensing
Understanding the available Salesforce license types is key to implementing an effective hybrid licensing strategy.
Here’s a look at some of the common Salesforce licenses:
1. Full User Licenses
These licenses provide access to the complete set of Salesforce features, including Sales Cloud, Service Cloud, or both.
- Ideal For: Sales representatives, customer support agents, and key management personnel who need full CRM capabilities.
2. Platform Licenses
Platform licenses are more restricted and are generally used for custom apps built on the Salesforce platform. They offer core access to features needed to interact with custom applications but not the broader CRM functionality.
- Ideal For: Users who need access to custom applications but do not require CRM-specific tools such as leads, opportunities, or service cases.
3. Limited Use Licenses
Limited Use Licenses include Chatter Plus, Employee Apps, or Community licenses. These offer highly restricted access to core CRM capabilities but provide enough functionality for users who need basic interaction with Salesforce data.
- Ideal For: Contractors, temporary staff, partners, or employees who only require viewing capabilities or very limited interaction with Salesforce.
4. Read-Only Licenses
These licenses allow users to view Salesforce data without making any changes.
Ideal For: Executives, management personnel, or stakeholders who need to monitor data through dashboards and reports. Ons for 3-5 years, as hybrid setups often see cost fluctuations over time.
Read about salesforce trial licenses.
Steps to Negotiating Hybrid Salesforce Licensing
The key to successfully negotiating hybrid Salesforce licensing is preparation. Here’s a step-by-step guide to ensure that you get the best deal for your organization:
Step 1: Assess the Needs of Each User Group
The first step in negotiating hybrid licensing options is to assess the needs of each user or user group. Different roles will have varying requirements for Salesforce features, and this will determine the best license type for each role.
- Sales Teams: Likely need full access to Leads, Opportunities, Accounts, and advanced reporting.
- Support Teams: Need access to Service Cloud capabilities, such as cases, solutions, and customer profiles.
- Operations and Admin Staff: They may need Platform licenses to interact with internal applications and automation but not core CRM features.
- Stakeholders and Managers: Often require Read-Only licenses to view performance dashboards.
Step 2: Conduct a Cost Analysis
Once you have mapped out user needs, the next step is to conduct a cost analysis comparing the different types of licenses.
- License Costs: Gather current pricing for each type of license from Salesforce and consider whether discounts are available for bulk purchases.
- Cost Savings from Hybrid Approach: Calculate the potential savings from assigning less expensive licenses where appropriate. For example, moving a user from a Full User License to a Platform License could lead to significant savings.
- Avoid Over-Licensing: Do not give Full User Licenses to users who do not need them, as this is often where the highest cost savings can be realized.
Step 3: Bundle Licenses for Maximum Leverage
Bundling different license types is a key strategy in hybrid licensing negotiation. Salesforce often offers better discounts for larger license volumes.
- Mix License Types: To maximize your leverage, include a combination of Full User, Platform, and Limited Use Licenses in your negotiation.
- Present Growth Potential: Let Salesforce know about your future growth plans. This could motivate them to offer a better rate now in hopes of further expansion.
Step 4: Negotiate Terms and Flexibility
Hybrid licensing negotiation is about more than just the cost. Terms of usage, scalability, and contract flexibility are just as important.
- Scalability: Request the ability to scale up or down as needed. This ensures you’re not locked into an inflexible license number, which can save money if your headcount decreases.
- Conversion Flexibility: Negotiate the option to convert a Full User License to a Platform License if a user’s role changes or access requirements decrease.
- Add-On Discounts: If you’re interested in add-ons like Marketing Cloud, CPQ, or Tableau, bundle them with your license negotiation to receive better pricing.
Step 5: Timing is Key
Timing your negotiation can greatly influence the outcome. Salesforce operates on a fiscal year that ends in January, and each quarter ends in April, July, October, and January.
- End-of-Quarter/Fiscal Year Negotiations: Salesforce Account Executives are often more inclined to offer discounts and better terms at the end of their fiscal quarters or years as they work towards meeting their sales targets.
Best Practices for Managing Hybrid Salesforce Licensing
1. Rightsize Licensing Regularly
Once you have implemented a hybrid licensing strategy, periodic reviews are crucial to ensure your licensing remains optimized.
- Quarterly Audits: Conduct quarterly audits to assess whether users are using the licenses they have. Downgrade licenses if a user does not require full access anymore.
- Monitor Inactive Users: Look for inactive users and either deactivate their licenses or reassign them to a more appropriate license type.
2. Use Salesforce Tools to Track License Usage
Salesforce provides tools and reports to track how users interact with the platform.
- Login Metrics: Use login metrics to understand how frequently users log in and determine if they require full access.
- Usage Reports: Run reports on feature usage to identify if certain users are not leveraging the full potential of their licenses, potentially indicating the need for a downgrade.
3. Negotiate at Renewal Time
License renewal is an excellent opportunity to revisit your licensing strategy and negotiate new terms.
- Leverage Past Usage Data: Present data showing under-utilization to support your request to change license types or reduce the number of Full User Licenses.
- Bulk Renewal Discounts: If you’re renewing several different types of licenses, negotiate for volume-based discounts.
Case Study: Successful Hybrid Licensing Implementation
Consider a mid-sized logistics company that was struggling with rising Salesforce licensing costs. The company initially used 150 Full User Licenses across various departments, including operations, sales, support, and administrative roles that rarely needed full CRM capabilities.
Step 1: Needs Assessment
The company conducted a comprehensive assessment and found that:
- Sales Team (50 Users): Needed Full User Licenses.
- Support Team (30 Users): Needed Service Cloud Licenses.
- Operations Team (50 Users): Only required custom apps, leading to Platform License needs.
- Admin and Executives (20 Users): Only Read-Only Licenses are needed to view reports and dashboards.
Step 2: Cost Analysis and Negotiation
By implementing a hybrid licensing approach:
- The company moved 50 users from Full User Licenses to Platform Licenses.
- Admin and executives were moved to Read-Only Licenses.
Step 3: Outcome
This hybrid licensing approach saved the company $75,000 annually. They also negotiated additional flexibility in scaling their licenses up or down without penalty during renewal time, ensuring they could easily adjust licensing based on growth or role changes.
Read about Salesforce license consolidation.
Key Takeaways for Negotiating Hybrid Salesforce Licensing
- Assess Needs Thoroughly: Understand the distinct requirements of different departments and match those needs to the appropriate license types.
- Bundle Licenses Strategically: Mixing different license types can give you leverage to negotiate better rates from Salesforce.
- Negotiate Flexibility and Scalability: Ensure your contract allows for the flexibility to scale up or down, avoiding penalties for changes in headcount.
- Use Salesforce Usage Data: Salesforce’s tracking tools continuously assess whether each user effectively uses the assigned license.
- Leverage Timing: Timing negotiations for the end of Salesforce’s fiscal quarter or year can lead to better discounts.
Negotiating Hybrid Salesforce Licensing FAQ
What is hybrid Salesforce licensing? Hybrid Salesforce licensing involves using a combination of different Salesforce license types to meet users’ varying needs while optimizing costs.
Why should I consider hybrid Salesforce licensing? Hybrid licensing helps reduce costs by avoiding over-licensing, providing flexibility, and aligning the right functionality with each user group’s requirements.
Which Salesforce licenses are commonly used in hybrid licensing? Common licenses include Full User Licenses, Platform Licenses, Limited Use Licenses, and Read-Only Licenses, each tailored for different access levels.
How can I assess my company’s licensing needs? Map each department’s roles to their Salesforce requirements. Understand which users need full CRM capabilities and which can work with limited features or custom apps.
How does bundling licenses help in negotiations? Bundling different types of licenses allows you to negotiate better rates, as Salesforce tends to offer discounts for larger, mixed-license deals.
What flexibility should I negotiate in hybrid Salesforce licensing? Negotiate for scalability to adjust license numbers up or down and the ability to convert licenses if user roles change or their access needs vary over time.
When is the best time to negotiate Salesforce licenses? The best time is near the end of Salesforce’s fiscal quarter or year when Account Executives are more inclined to offer favorable discounts to meet their targets.
Can I change user licenses after implementing a hybrid strategy? Yes, but it’s essential to negotiate flexibility beforehand to allow easy conversion between license types without facing financial penalties.
How often should I review Salesforce licenses? Conduct quarterly reviews to ensure that each user’s license aligns with their current needs and adjust accordingly to prevent unnecessary expenses.
How can I track Salesforce license usage effectively? Use Salesforce’s built-in reporting tools to monitor user activity, login frequency, and feature usage to determine if the assigned licenses are still appropriate.
Should I engage my Salesforce Account Executive for hybrid licensing? Yes, engaging your Salesforce Account Executive early in the process can help secure better terms and understand available options for hybrid licensing.
How can I ensure my hybrid license mix is cost-effective? Evaluate the total cost versus the features needed. Assign less expensive licenses, like Platform or Read-Only, to users who do not require full access to save costs.
What if I overestimate the number of licenses needed? If you have overestimated, negotiate the option to scale down without penalties during the renewal period to avoid paying for unused licenses.
How can I negotiate Salesforce add-ons with hybrid licensing? Bundle add-ons like Marketing Cloud or CPQ with your licenses during negotiations to receive better pricing and ensure all additional features are included at a lower cost.
What are the key benefits of hybrid Salesforce licensing? Key benefits include cost savings, better alignment of licenses to user needs, increased flexibility, and scalability as your business grows or changes.
