Leveraging Salesforce License Volume for Discounts Summary
- Bundle multiple license types to gain overall savings.
- Negotiate towards the end of Salesforce’s fiscal quarter or year.
- Engage Salesforce Account Executives early for favorable pricing.
- Consider long-term commitments to secure larger discounts.
- Benchmark competitor CRM pricing to increase negotiation leverage.
Leveraging Salesforce License Volume for Discounts
Salesforce licensing can be a major investment for businesses, but one of the best ways to reduce costs is by leveraging license volume to secure discounts.
Volume-based licensing negotiation is an effective strategy, especially for large or rapidly scaling organizations that need many user licenses. This guide will cover leveraging volume to negotiate discounts, best practices to maximize cost savings, and common pitfalls to avoid during negotiations.
Why Leverage Volume for Salesforce Discounts?
Like many software vendors, Salesforce offers discounts when you buy in larger quantities. Leveraging license volume for discounts provides several benefits:
Future-Proofing: Locking in discounted pricing today can help protect your business from future price hikes.
Cost Savings: More licenses can mean a lower per-license cost, leading to significant savings over the contract’s lifetime.
Simplified Negotiation: Larger deals give you more leverage when negotiating with Salesforce, as they have an incentive to win or retain bigger contracts.
Steps to Leverage License Volume for Discounts
Step 1: Assess License Needs Accurately
Before entering negotiations, it’s crucial to accurately assess how many licenses your organization needs now and in the foreseeable future.
- Current User Analysis: Identify how many users need Salesforce licenses and categorize them by role.
- Growth Forecast: Consider expected company growth over the next few years. Anticipate new hires and increase usage across departments.
- Right-Sizing: Match each user type to the appropriate license level to avoid over-licensing, which could negate any discounts gained.
Step 2: Bundle Different Types of Licenses
Salesforce offers different types of licenses, each with varying features and costs. Bundling multiple license types together can lead to bigger savings.
- Full and Limited Use: Bundling Full User Licenses with Limited Use Licenses can help you get a better overall discount rate.
- Include Partner or Community Licenses: Adding these into the volume negotiation can also increase leverage if your organization needs external user access (e.g., partners or customers).
Step 3: Engage Early with Salesforce Account Executives
Your Salesforce Account Executive (AE) is critical in the negotiation process. AEs have targets, and large-volume deals help them meet these.
- Communicate Your Needs: Be upfront about your volume requirements, timelines, and budget constraints.
- Build a Relationship: A strong relationship with your AE can improve the negotiation process, making them more inclined to offer favorable pricing.
Step 4: Compare with Competitors
Salesforce isn’t the only CRM on the market, and they know that. Leveraging competitive pricing information can give you more leverage.
- Benchmark Against Competitors: Research pricing for other CRM platforms, such as HubSpot, Zoho CRM, or Microsoft Dynamics, to demonstrate a cost-conscious approach.
- Be Willing to Walk Away: Showing willingness to consider alternatives gives you more bargaining power.
Read how to conduct a cost-benefit analysis for Salesforce licenses.
Step 5: Time the Negotiation Strategically
Timing can impact your ability to get discounts. Salesforce operates on a fiscal year ending in January, and quarters end in April, July, October, and January.
End of Quarter or Fiscal Year: Engage in negotiations close to the end of a Salesforce fiscal quarter or year, as AEs will be more motivated to close deals and hit their targets.
Best Practices for Leveraging Volume for Discounts
1. Lock in Long-Term Agreements
When negotiating, a long-term commitment may help you achieve greater discounts.
- 3-5-Year Commitments: Consider locking in a multi-year contract to secure a lower rate. Salesforce typically offers more discounts for long-term agreements.
- Price Protection Clauses: Negotiate a clause to guard against future rate increases, keeping your pricing predictable.
2. Consider Flexible Licensing Options
If your organization’s size or user needs fluctuate, having flexibility built into your licensing agreement is essential.
- Scalable Licensing: Request flexible license terms that allow you to scale up or down based on the number of users, which can save money during low-demand periods.
- Salesforce Flex: For organizations with variable user needs, explore Salesforce Flex, which offers pay-as-you-go licenses that allow you to manage fluctuating contractor numbers.
3. Evaluate Your Total Salesforce Spend
Discounts aren’t just based on the number of licenses; your total Salesforce spend across different services can also factor in.
- Add Additional Products: If you consider Salesforce Marketing Cloud, CPQ, or other add-ons, bundling these with your core CRM licenses can increase leverage.
- Consider Future Investments: Mentioning potential purchases may motivate Salesforce to offer discounts to secure more business later.
4. Document Everything
Ensure all terms and discounts are documented during negotiations to avoid misunderstandings later.
Clarify Renewal Terms: Ensure renewal conditions are documented so there are no surprises when renewing your agreement. to match or beat competitor pricing.
Written Agreements: Have all negotiations summarized in writing, whether by email or contract. This ensures accountability for the agreed terms.
Common Pitfalls to Avoid
1. Focusing Only on Price Per License
A common mistake is focusing on reducing the per-license cost without considering the overall value.
Solution: Look at the bigger picture, including services, support, additional features, and add-ons that might make the solution more valuable to your business.
2. Over-Estimating License Volume
Another pitfall is over-estimating how many licenses your company needs, leading to over-purchasing and underutilization.
Solution: Reassess your license requirements regularly and ensure you only purchase what you need. Use Salesforce’s tools to track and manage usage.
3. Ignoring Scalability
Failing to negotiate scalability into your agreement can be problematic if your company experiences unexpected growth or contraction.
Solution: Ensure the contract includes flexible terms for increasing or reducing license numbers without financial penalties.
Case Study: Leveraging Volume for Salesforce License Savings
Consider a mid-sized technology company expanding its sales and customer support teams. To accommodate growth, they needed an additional 200 Salesforce licenses. By following a structured approach, they secured significant discounts.
Step 1: Accurate Assessment
The company conducted an internal analysis to determine exactly how many licenses were needed and the specific types required. They avoided buying excessive Full User Licenses for staff needing limited functionality.
Step 2: Bundling and Early Engagement
They bundled 150 full-user licenses for the Sales team and 50 limited-use licenses for the Support team. They increased their leverage by engaging their Salesforce AE early and discussing potential future expansions.
Step 3: Competitive Comparison
They benchmarked against other CRMs, showing the Salesforce AE that Microsoft Dynamics offered a slightly cheaper package, which helped secure better pricing.
Step 4: Timing the Negotiation
Negotiations took place towards the end of Salesforce’s fiscal quarter. By timing the deal appropriately, the company capitalized on Salesforce’s need to meet quarterly targets.
Outcome: The company secured a 20% discount on their Full User Licenses and a 25% discount on Limited Use Licenses, saving over $50,000 annually.
Key Takeaways for Leveraging Salesforce License Volume
Document All Agreements: Ensure all negotiated terms are documented to avoid discrepancies during the contract period or renewal.
- Accurately Assess Needs: Before negotiating, understand exactly how many licenses are needed and avoid overestimating requirements.
- Bundle License Types: Bundling different license types can lead to significant savings, as Salesforce tends to favor larger, more diverse deals.
- Engage early with Account Executives (AEs): AEs are your allies in the negotiation process, especially when they are working to hit quarterly or annual targets.
- Consider Long-Term Contracts: Longer-term agreements will likely come with discounts and price protections.
FAQs: Leveraging Salesforce License Volume for Discounts
How can I leverage volume to get Salesforce license discounts? Leverage volume by bundling different types of licenses and negotiating for a larger deal. The more licenses you buy, the more willing Salesforce is to offer discounts.
When is the best time to negotiate Salesforce license discounts? The best time is towards the end of a fiscal quarter or fiscal year when Salesforce Account Executives are under pressure to meet sales targets.
How do I assess how many Salesforce licenses I need? Evaluate each user role’s requirements within your organization. Analyze which features are necessary and determine the appropriate license type and quantity.
Should I bundle different Salesforce licenses together? Yes, bundling different licenses, such as Full User, Limited Use, and Community Licenses, can give you more leverage and result in bigger discounts.
Can I negotiate a multi-year Salesforce agreement? Yes, multi-year agreements often lead to better pricing. Salesforce is more inclined to provide discounts if they can secure your commitment over a longer term.
How can competitor pricing help in negotiations? Researching competitor CRM pricing can provide leverage by showing Salesforce that you are considering other options, which may prompt them to offer more competitive rates.
What is Salesforce Flex, and how can it help? Salesforce Flex offers pay-as-you-go licenses, ideal if you have fluctuating contractor needs. It allows you to manage licenses without committing to fixed quantities.
How should I engage my Salesforce Account Executive? Engage early, be upfront about your needs, and build a strong relationship. Let them know your timelines, volume requirements, and potential future expansions.
Should I lock in a long-term commitment with Salesforce? If you foresee long-term Salesforce usage, locking in a 3-5-year deal can help secure better discounts and price protections against future increases.
What should I do if I over-estimate my license needs? Regularly reassess usage and try to negotiate flexible terms upfront that allow you to reduce the number of licenses without penalties if you find you have over-estimated.
How do I avoid financial penalties for license scalability? Ensure your agreement includes scalability provisions, allowing you to adjust licenses based on actual needs without financial penalties.
Are there any benefits to adding other Salesforce products to the license deal? Yes, bundling other Salesforce products, like Marketing Cloud or CPQ, with your CRM licenses can increase your bargaining power for better overall discounts.
Is there a risk of being locked into an unfavorable contract? There is always a risk, but you can mitigate this by including scalability options and ensuring price protection clauses are part of the negotiated terms.
What should be documented during negotiations? Document all agreed terms, including discounts, renewal conditions, and scalability clauses, to avoid disputes during the contract period or renewal.
How often should I reassess my Salesforce license needs? Reassess licensing needs at least annually or more frequently if your organization experiences significant growth or restructuring.
