Negotiating Seasonal or Promotional Discounts with Salesforce
- Highlight your long-term commitment to Salesforce.
- Ask about promotional periods like quarter-end or year-end.
- Bundle additional products or services to gain leverage.
- Explore competitor offerings as negotiation points.
- Use existing customer success as a bargaining tool.
Salesforce’s Cost Structure
Salesforce licenses typically cost between $300 and $2,000 per user annually. This wide pricing range can quickly increase investment, especially for large organizations.
Understanding the nuances of Salesforce’s licensing structure can help you identify opportunities for cost savings, such as volume discounts or tailoring the number of licenses to your actual needs.
Salesforce offers different licenses, such as Sales Cloud, Service Cloud, Marketing Cloud, and Community Cloud licenses, each tailored to meet organizational needs. Understanding which license suits your team best will help you avoid unnecessary expenditures.
Additionally, Salesforce provides add-on products and modules that can be bundled for a better deal. License costs vary depending on the region and the specific package chosen, impacting overall costs.
Timing Your Negotiations
One of the most critical aspects of negotiating with Salesforce is timing. Like most sales-driven organizations, Salesforce operates on a fiscal year cycle, which ends on January 31st.
As their sales teams try to meet quotas, the end of each fiscal quarter—especially the year-end—provides a golden opportunity to secure better deals.
In December and January, sales reps are most eager to close deals and, consequently, most open to offering discounts.
End of Quarter/Year Opportunities:
- Salesforce’s fiscal quarters end in April, July, October, and January. Timing your negotiations during these periods, especially December and January, can result in substantial discounts.
- In addition to quarter-end negotiations, consider approaching Salesforce during slow sales periods or economic downturns when they are more likely to offer attractive deals.
Strategic Approaches to Securing Discounts
Enterprise License Agreements (SELA)
For larger enterprises, Salesforce Enterprise License Agreements (SELA) can be valuable in negotiations. SELA is designed specifically for large clients with substantial Salesforce investments, and it offers customized pricing structures, longer commitment periods, and more favorable terms. Leveraging a SELA can help enterprises gain significant cost advantages.
With SELA, businesses gain more contract flexibility and can bundle different Salesforce products, reducing the overall price per license. A SELA also allows organizations to avoid yearly price hikes by locking in rates for an extended period.
License Optimization Strategies
Before entering negotiations, it’s essential to optimize license usage. Wasted or underutilized licenses are a common issue that can drive up costs unnecessarily. Conducting a thorough license audit can identify which licenses are being used effectively and which are not.
Some effective steps include:
- Conducting thorough license audits to identify actual usage patterns.
- Removing inactive licenses that are assigned to former employees or rarely-used accounts.
- Downgrading premium licenses that aren’t fully utilized to more basic licenses.
- Consolidating duplicate accounts or ensuring that licenses are allocated appropriately.
- Identify seasonal users and ensure that these users are on more flexible plans, such as temporary or usage-based licenses.
The more streamlined and well-documented your Salesforce usage is, the better your position will be when asking for discounts.
Leveraging Usage Data to Build Your Case
The key to effective negotiations is preparation. When you sit down to discuss your contract, ensure you have the right data on hand, such as:
- Historical usage patterns: Show how many users are active and when usage peaks.
- Peak vs. off-peak numbers: Demonstrate that your needs fluctuate to justify more flexible pricing options.
- ROI metrics: Be prepared to show how Salesforce’s tools have benefited your organization, which can be used as leverage for better terms.
- Comparative quotes from competitors: Mention that you’re considering other CRM platforms. This puts pressure on Salesforce to offer a more competitive rate.
- Future growth estimates: Outline expected growth and explain how Salesforce’s tools are critical to that growth. This information can be used to request scalable pricing.
Read about key terms in Salesforce license agreements.
Seasonal Scaling Strategies
If your business has seasonal fluctuations (e.g., holiday seasons, promotional periods), you should ask for flexibility in scaling your licenses. Negotiation strategies for seasonal needs include:
- Requesting temporary scaling for additional licenses during peak seasons.
- Negotiating for shorter commitment periods for temporary users ensures you don’t overpay during low-usage periods.
- Seeking credits for reduced usage during off-peak times allows your business to keep costs manageable throughout the year.
- During seasonal peaks, choosing monthly pricing options instead of annual commitments allows you to add or remove licenses as needed.
- Pay-per-use agreements: Negotiating a pay-per-use model where the organization pays based on the actual number of users active during peak periods.
Building a Strong Negotiation Position
Multi-Year Commitments
Like many enterprise software providers, Salesforce tends to reward customers who commit to longer contracts. By offering a multi-year commitment, you can often secure a significant discount. Organizations can save up to 30% by optimizing their license structure and making longer-term deals. However, be mindful of any scalability requirements you might have in the future.
To strengthen your negotiation position, consider offering a multi-year deal but asking for mid-term reviews to evaluate whether the existing licenses meet your requirements. Mid-term reviews allow you to adjust the terms if the business needs to change.
Volume Discounts
Salesforce is more inclined to offer discounts if you can increase the overall contract value. This could mean bundling different Salesforce products like Sales Cloud, Service Cloud, or Marketing Cloud. You can also increase your negotiating power by purchasing add-on features or additional licenses that might come at a better rate when bought together.
Negotiating a global license contract can also result in substantial savings for companies with a global presence. Salesforce is more likely to offer volume discounts if you provide a larger contract value across different regions.
Usage Commitments
Another strategy to secure a better rate is committing to a certain usage level or expansion over time. Salesforce is often willing to offer better rates if you agree to gradually scale up your usage over the contract term, as this assures them of continued revenue growth.
Best Practices for a Successful Negotiation
License Management
Good license management can help you avoid overspending. Some best practices to consider include:
- Regular audits to ensure that licenses are being fully utilized and to eliminate those that are not.
- Establishing a clear onboarding and offboarding process for users to avoid paying for unused licenses.
- Implementing automated tracking to manage licenses in real-time and prevent over-provisioning.
- Schedule optimization reviews regularly to ensure your Salesforce licenses meet your current business needs.
- User segmentation: Classify users by their specific role or access needs, which will help you allocate licenses more effectively and avoid over-purchasing full licenses for users with limited requirements.
Relationship Building
Your negotiation success often hinges on the strength of your relationships with Salesforce representatives. Cultivate relationships with key contacts, such as:
- Account Executive (AE): This is your primary point of contact, and having a good relationship can go a long way.
- Technical Account Manager (TAM): The TAM can provide useful insights into product usage and upcoming features during negotiations.
- Partner ecosystem representatives: Engage with Salesforce partners who may provide third-party solutions that integrate well with your Salesforce environment. This may lead to discounts or package deals.
- Sales Management: Build rapport with the regional sales manager or even higher-ups within Salesforce’s sales department. Sometimes, escalating your discussions beyond the Account Executive can result in additional discounts or concessions.
Risk Management and Contract Flexibility
Always be mindful of risk management when negotiating your contract. This means ensuring that there are provisions for scaling your usage up or down and clear exit clauses should you decide to switch platforms. Key considerations include:
- Scalability provisions: You can easily scale your license count based on seasonal or growth needs.
- Exit clauses: Understand the conditions under which you can terminate the contract without penalties.
- Price protection clauses: Lock in pricing for multi-year contracts to protect against unexpected price increases.
- Early renewal discounts: If you choose to renew before the end of the contract period, negotiate for early renewal discounts. This can help secure lower prices while avoiding sudden price hikes.
Maximizing ROI Through Feature Utilization
To build a strong case during negotiations, demonstrate that your organization is committed to fully utilizing Salesforce’s platform capabilities. This shows that you are invested in their solution and helps justify why you need favorable terms.
- Showcase high platform adoption rates within your team.
- Document how key features have driven business value.
- Present data on ROI metrics, such as increased sales, improved customer satisfaction, or productivity gains.
- Outline future growth plans and demonstrate how Salesforce is integral to achieving your business goals.
- Highlight training initiatives and user certifications demonstrating your commitment to effectively leveraging the Salesforce platform, which can support your case for better terms.
Alternative Licensing Options
Platform Licenses
In some cases, not all users need the full functionality of Salesforce’s core CRM licenses. Instead, consider Platform Starter or Platform Plus licenses for users requiring limited functionality, such as report viewing or specific app usage. These licenses are more affordable while providing the necessary access levels.
Platform licenses are ideal for users who need to interact with custom apps or internal tools built on the Salesforce platform but don’t require access to core CRM functions. By segmenting users into different license types, you can better control costs.
Identity Licenses
If users only need Single Sign-On (SSO) or authentication features without accessing Salesforce CRM data, Identity licenses provide a much more cost-effective option. These licenses can help organizations minimize costs while meeting access needs for certain employees or partners.
Identity licenses are also useful for external partners or vendors with limited collaboration access to specific projects. These licenses provide community access without the high cost of a full CRM license.
Leveraging Partner Ecosystem and Add-Ons
Salesforce’s extensive partner ecosystem provides third-party applications that integrate seamlessly with the Platform. These applications can enhance the platform’s value without purchasing additional Salesforce-developed add-ons. Negotiating discounts or package deals involving third-party apps can further reduce costs.
Some partners offer volume discounts or bundled services when multiple solutions are purchased together, giving you the leverage to build a more comprehensive CRM environment at a lower cost.
- Explore AppExchange solutions that may provide the functionality you need at a lower cost than Salesforce’s native offerings.
- Look for partner promotions or incentives that coincide with Salesforce’s fiscal year-end, as partners may also be more willing to offer discounts during these times.
Understanding Salesforce’s Pricing Tiers and Promotions
Salesforce often provides promotional pricing for new features or product launches. Keeping an eye on these promotions can help your organization take advantage of lower prices. Promotional discounts are frequently offered for:
- New product releases: Salesforce wants to drive adoption, so they often offer discounts for early adopters.
- Beta features: Participating in beta programs can give you early access to new features at a reduced cost or even free for a limited time.
- Bundled services: Salesforce often bundles new products with existing services at a reduced overall rate when promoting them.
During negotiations, inquire about upcoming promotions or special pricing. Sometimes, mentioning your interest in certain features or products can prompt the account executive to reveal potential discounts.
Internal Preparation for Negotiations
Before starting negotiations, internally align your teams on specific goals and objectives regarding Salesforce. This includes:
- Budget Constraints: Clearly define your budget limits and determine what level of investment is acceptable.
- Usage Requirements: Collaborate with different departments to determine the specific features and licenses required for their roles.
- Scalability Needs: Outline future business growth, seasonal spikes, and any potential Mergers and Acquisitions (M&A) that may impact license requirements.
- Alternative Options: Identify and evaluate other CRM solutions to keep Salesforce competitive in their pricing. Mentioning competitors like Microsoft Dynamics 365 or HubSpot during discussions can sometimes help in securing better offers.
Establishing clear internal goals will better prepare you to negotiate with Salesforce and ensure that you advocate for terms that meet your company’s needs without overextending your budget.
FAQ: Negotiating Seasonal or Promotional Discounts with Salesforce
When should I approach Salesforce for seasonal or promotional discounts?
The ideal time is Salesforce’s fiscal quarter-end or year-end. During these periods, especially January (fiscal year-end), sales teams are under pressure to close deals and may offer better discounts.
Are discounts only available to new customers, or can existing customers benefit?
Existing customers can also benefit, especially during contract renewals or account expansions. To request better terms, leverage your history with Salesforce, such as on-time payments or increased product adoption.
What role does bundling products play in negotiating discounts?
Bundling products like Sales Cloud, Marketing Cloud, and Tableau often results in cost savings. Salesforce is more willing to provide discounts when you commit to multiple services in one deal.
How can I prepare for a negotiation with Salesforce?
Understand your needs, current licenses, and budget. Research competitor pricing, such as Microsoft Dynamics or Oracle NetSuite, and bring it to the table. Prepare to discuss Salesforce’s value to your business and how you plan to expand usage.
Are non-profits eligible for seasonal or promotional discounts?
Yes, Salesforce’s Power of Us program offers free licenses to non-profits and reduced pricing for additional ones. During promotional periods, non-profits may also access temporary offers on new products or services.
Can Salesforce competitors help in negotiation leverage?
Presenting competitive offers from companies like HubSpot or Zoho CRM can encourage Salesforce to match or beat the pricing. This shows that you have alternatives and are exploring your options.
What kind of discounts can I expect for long-term commitments?
Multi-year contracts typically secure better rates, often with 10-20% discounts. Salesforce may offer deeper savings by showing a willingness to commit to three or more years.
Does Salesforce offer specific promotional periods outside of quarter-end?
Yes, Salesforce occasionally runs promotions during major events like Dreamforce. These offers might include reduced rates, extended free trials, or bundled deals for specific products.
How important is the size of my business in negotiating discounts?
Large enterprises often have more negotiating power due to higher deal values. However, small businesses can still secure discounts by demonstrating growth potential or committing to scaling their use of Salesforce products.
Is there flexibility in pricing for mid-contract license expansions?
Salesforce is often open to discounts for mid-contract expansions. For example, if you need additional users or features, they might provide incremental discounts to incentivize the purchase.
Can unused features or licenses help in renegotiating costs?
Yes, reviewing unused licenses or features can be a powerful tool. By identifying underutilized services, you can propose eliminating them for cost savings or negotiating additional products for the same price.
How do Salesforce’s seasonal discounts compare to those of its competitors?
Salesforce’s discounts are competitive but not always the deepest. Competitors like Zoho or Pipedrive may offer more aggressive discounts, which can be leveraged in negotiations to push Salesforce for better terms.
Do promotional discounts affect implementation costs?
Promotional discounts usually apply only to software licenses. Implementation, consulting, and training fees are often separate and may not qualify for the same discounts. Always ask for clarity on these costs.
Is it better to negotiate directly with Salesforce or through a reseller?
Both options have benefits. Direct negotiation gives you more control over the terms, while resellers may have access to exclusive deals or incentives. Evaluate both approaches to see which aligns better with your goals.
What is the most common mistake in Salesforce discount negotiations?
The most common mistake is not preparing thoroughly. Many businesses fail to research competitors, review their current Salesforce usage, or ask for better terms during key times like quarter-end. Being proactive and informed is essential for success.
