Before You Sign: Get a Second Opinion on Tech Platform Products & Pricing
Technology platform licensing contracts vary in structure and some vendors with enterprise-grade products have virtually impossible to negotiate cancellation terms. Before you sign a contract, you should get a second opinion about the products and unit prices.
As vendors like HubSpot and Salesforce have their annual conferences this week (Inbound and Dreamforce, respectively), new product and feature announcements are going to drive demand and sales teams will try to close deals faster based on exciting announcements.
This is fantastic leverage to get stakeholders engaged in your transformation program, however, rushing into a licensing agreement has risk.
First, let's talk about shelfware. This is a cute term for all of the products you have and are not using, so they're sitting figuratively on a shelf collecting dust.
You end up with shelfware in a variety of ways:
The product is a good fit for requirements in a future phase and will not be leveraged until dependencies are completed
The product might be a fit for requirements, but there has not been sufficient due diligence around exact needs
The product is not suitable at all, so you have something that your organization literally cannot use
Yes, those are real problems, and I've seen each of those multiple times in the last three months.
Second, let's talk about discount potential. Platform vendors are using a variety of pricing strategies: some list prices on the website, others are entirely opaque and price based on value to both parties.
You end up with discount potential because:
You don't know where the bottom is based on prior experience, so it seems like the vendor has already provided a great discount by anchoring to publicly listed pricing
You have leverage based on pressure the vendor has to meet their goals for end of fiscal quarter or year
Bundling products enables a greater discount because of (perceived) increase in stickiness from the vendor's perspective
On the last point, this is an instance when carrying shelfware might be worth it for an overall discount.
TLDR: Before you sign, get a second opinion on the products and prices in the contract, and whether those are best fit based on high level requirements.
