My 3 Guiding Principles for The Negotiator Guru
Imagine you are a C-Suite executive and your business is built on a franchise model.
Each franchise branch is owned and managed by a different person but they all use the same ERP and the big corporate umbrella entity that you own pays for all the services.
The individual owners dictate which software and services they use, how many licenses they need, etc.
Your annual bill for all the different contracts comes to $2.5 million.
How would you feel if I looked through your contracts and told you that, based on the prices your peers pay, you should actually be billed closer to $900,000 - a more than 60% savings - for the same host of services?
You’d probably want to flip the table we’re sitting at.
I started The Negotiator Guru because I believe in 3 things:
- Clients should all pay the same price for the same product*
- Clients have the right to know what rates they should be paying in comparison to their peers.
- Clients should know what to look for in software contracts to eliminate potential issues before they arise.
I want to go into each of these beliefs in more detail and give some case study examples to further demonstrate why I think these points are so important.
Clients should all pay the same price for the same product.
It’s common for people to believe the price they’re paying is equal to what their neighbor paid for the same product.
Due to both Master Service and Non-Disclosure Agreements between most software vendors and their customers, companies are not allowed to publicly share what rates they’re paying for their different products/services. Subsequently, software suppliers will almost never advertise a specific price point for enterprise customers but rather indicate “call for details” in the interest of driving the most revenue from the potential relationship.
In other words, in the art of enterprise SaaS sales, you won’t find any published rate information for you to benchmark your contract against. The only way for you to identify whether or not your rates are competitive is to engage a firm that holds that market intelligence as a result of analyzing contracts on a daily basis.
The fact of the matter is: Prices always vary.
No one pays retail as an enterprise customer but some companies achieve significant discounts compared to other similarly-sized operations.
In some cases, you’re getting ripped off if you’re not getting an 80-90% discount off published prices.
It wouldn’t be logical to expect a huge company like Coca-Cola and a small startup to be paying the same price purely based on volume alone. But brands of the same size with similarly-sized contracts (based on annual revenue & annual spend for their contract) should be paying the same price.
I have great respect for wonderful sales executives who sell value to customers, but my company believes the market should dictate a fair price for all IT goods & services (Services, Software, Hardware, etc).
The enterprise sales executive is arguably the greatest asset these IT companies have within their organizations. The good ones truly know how to sell “perceived” value.
Regardless of how personable a sales executive is, we believe the market should dictate what a fair price is - much like buying or selling a home. In order for this work, we believe that rate information should be readily available to customers. In order for this information to be shared legally, we need to enter into a commercial agreement with your company and charge for these advisory services.
Clients have the right to know what rates they should be paying in comparison to their peers.
On a daily basis we see similar-sized clients with similar-sized contracts have a 30 – 60% price variance.
Now, whether this is because some companies didn’t have strong negotiating skills or perhaps they just didn’t know how their contracts compared to the market doesn’t matter. What does matter is that clients know how their contract prices compare so they can make future decisions accordingly.
Ideally, through access to more information regarding IT contract pricing, you’ll be able to secure the best rates for your company. Leveraging this information can significantly impact a company’s bottom line.
But even if you aren’t able to achieve best-in-class pricing, we believe you should know what those rates are to empower decisions on how to work that supplier moving forward.
Often, relationships with IT suppliers run into the roots of your business and once you’re in that deep, it can be hard to break loose to find another vendor.
Even if you can’t get off of a big platform like Salesforce, Oracle or another ERP, you can make better-informed decisions about how you’re going to increase or decrease your use of that platform in the future.
There are a few market intelligence firms out there that supply basic and watered-down pricing information to clients but require a $30,000 per year subscription fee (per seat). This cost to have access to this benchmark data isn’t a feasible or justifiable expense for many companies.
We don’t feel that only Fortune 500 companies should have access to market intelligence firms and benchmark data.
The existing methods used to decide what the best price really is for any given enterprise could be improved. Most market intelligence firms take a general approach to setting correct pricing rather than looking at the specifics of each contract and the unique needs of each company.
For example, these firms will recommend that you should be getting a 60% discount if you’re spending $1 million with a particular IT company as a blanket rule.
Instead, we take into consideration the specific needs of our clients and use a Right Size, Right Price approach within every contract negotiation.
Clients should know what to look for in software contracts to eliminate potential issues before they arise.
Having a deep understanding of the terms of your most expensive contracts will help you save hundreds of thousands of dollars.
Here I want to briefly outline a few common contract issues that I see my clients face:
Price Protection (and not just by SKU)
Price protection generally comes up when you’re signing your first contract with a software provider. IT companies will compete for your business by offering you the lowest prices for their services with the expectation that they’ll be able to raise the rates once you’ve completely adopted the product.
Companies will always try to find ways to increase your annual expense. This is largely due to sales incentive plans in place with their sales development organization. Common tactics used by software companies include random internal audits to monitor usage (overage fees), product lift and shift changes (new SKUs), and service fees (for enhanced customer support).
More often than not our clients are very astute individuals that use their best efforts to price protect their organization’s contract for future years. That being said, it’s unrealistic to think anyone knows how to mitigate all the potential risks unless you do this everyday.
For example, to mitigate against the software companies from simply changing product names (SKUs) to bypass any preexisting price protection you may have on a specific product, we suggest you introduce contract language that protects your company using your total spend (vs a product-specific SKU) as the common denominator.
M&A Language
Make sure you have specific language in your contract about what happens in the case of a merger or acquisition.
Be sure to include language about a Termination for Convenience. This is a provision allowing you to get out of the contract if you acquire, or are acquired by, another company within a certain time frame - usually 90 days to 6 months.
Termination for Convenience eliminates the risk of having duplicate service providers for the same service after the transaction is closed. Without this stipulation, companies can find themselves with millions of dollars in expenses that are avoidable.
Note: In the interest of this article’s brevity we aren’t going to stipulate all the protections you need in an M&A transaction as this will be further explored in a future article. While the guiding principles of what to include within your contracts will remain consistent, client-specific protections will always require advisory services.
Termination for Breach
Termination for Breach language is important information to include in your contracts. In these cases, attorneys have to be involved and mal intent has to be proven by the accusing party.
This rarely ever happens and having the language laid out in the contract incentivizes IT companies to behave their best throughout the contract term.
License Limitations
It’s common to have language surrounding license limitations in your contracts. This basically says that you can use a specific license at a specific site for a specific reason.
These stipulations probably make sense on the surface and won’t alarm the person reading the contract but in most companies, with thousands of employees, not everyone is reading the contract. This could lead employees to inadvertently infringe on how the license may be used.
The best way for most companies to avoid this is to have seat-based pricing attached to specific personas (usage rights) rather than volume-based pricing.
Audit Rights
We’ll go into this further in a future article but I want to point it out here that you should be in control of the audit capabilities - don’t leave that in the hands of the supplier.
When IT companies retain audit rights, they have a Trojan Horse to get inside your company and find more ways to increase your pricing. They already know more about your company than you do - don’t give them the reigns to take over completely.
Roles & Responsibilities (when working with multiple parties)
Establishing clear lines of accountability is incredibly important when you’re working with multiple third parties.
As the owner of Company ABC, you’ve got Supplier X and Supplier Y. In each contract where there are dependencies for another supplier to take action, you will want to include a Roles & Responsibilities Matrix so that all parties are contractually agreeing to the same responsibilities/accountabilities. Conducting this exercise is not only a good way to align parties prior to the start of any project but also contractually protects you from any finger pointing across these same parties which will ultimately cost you time and money.
This Roles and Responsibilities matrix is oftentimes called a “RACI” Matrix - Responsible, Accountable, Consulting, Inform. The example below shows how it is used to clearly define roles and responsibilities across and within parties.
You can clearly see the task at hand, who is responsible for it, who is accountable for it, who needs to be consulted for it, and who is informed by it. Where appropriate we suggest including your internal resources as well as more often than not your suppliers will require your team to take action as well. Our clients use the RACI matrix process within their internal organizations as well to drive alignment and avoid potential issues before they arise.
From a tactical perspective, it’s important that the same RACI matrix is included within each supplier’s contract so that everyone is operating from the same table, terms, and conditions. This often takes some negotiation but with the proper foundation and alignment, you shouldn’t have any pushback from your suppliers. In fact, if you do have a supplier that is heavily pushing back against this exercise we recommend our clients view this as a potential leading indicator for what’s to come with that particular relationship.
With these 3 guiding principles, we ensure our clients are negotiating the best contracts for their needs.
Whether you’re in the process of negotiating your first IT contract or are looking to save big on your next renewal process, we’re here to share our experience and expertise with you.
We want to ensure that you’re paying the right price for the right products.
We want to make sure you have benchmark data to help you make decisions about the future of those contracts.
We want you to avoid contractual pitfalls by including key language around important, often overlooked points.
More resources
From Fortune 500 giants to fast-growing innovators, TNG has helped clients save 20% – 40%+ on enterprise software contracts — even when they thought it was impossible
Salesforce Renewal Negotiations: 7 Vendor Tactics That Will Cost You Millions (And How to Counter Them)
Let's cut to the chase: Salesforce didn't become a $30+ billion company by accident. They've built a renewal machine that's incredibly effective at extracting maximum value from enterprise customers: often at your expense.
If you're a CIO, CFO, or procurement leader heading into a Salesforce renewal negotiation, you need to understand exactly what you're walking into. Because here's the uncomfortable truth: your Salesforce rep isn't your partner. They're a highly trained professional whose compensation depends on growing your contract value.
We've helped hundreds of enterprises navigate Salesforce contract negotiations, and we've seen every play in their playbook. Here are the seven tactics that cost organizations millions: and exactly how to counter each one.
Tactic #1: The Timing Trap
Salesforce will reach out months before your renewal: not to help you plan, but to control the conversation before you've had time to assess your actual needs. They'll frame this as "getting ahead of things" or "ensuring a smooth renewal."
Meanwhile, they're identifying upsell opportunities, understanding your budget cycle, and positioning themselves to apply pressure when you're most vulnerable.
The Counter-Move: Start your internal renewal planning 6 months before your renewal date. Audit your current usage, assess alternatives, and build executive alignment before Salesforce initiates contact. When you control the timeline, you control the negotiation.
Tactic #2: The Inflated Baseline
Here's a number Salesforce hopes you never discover: their initial renewal quote typically starts around 10% above your current spend: before any "negotiation" even begins.
Some of these increases are obvious (new list prices, added users) while others are buried in contract language and other means. The goal? Anchor the conversation at a higher number so that any "discount" they offer still results in you paying more than you should.
Furthermore, it's important to understand that your Salesforce AE has a 10%+ revenue uplift target at each renewal which creates an automatic conflict when you're trying to save money. If your account is a "flat" renewal from the previous contract year with no sign of new products/licenses/etc. then you'll be handed over to the renewal desk. This team is compensated differently with the ultimate objective of never allowing your account to decrease below your current spend. Naturally, this team is incentivized to ensure there is 5% revenue growth.
The Counter-Move: Conduct a thorough license audit before engaging. Many organizations discover they're paying for Premium editions when Standard would suffice, or carrying licenses for users who left the company years ago. Our Right Price Benchmarking™ service consistently reveals that enterprises overpay by 20-40% simply because they never questioned the baseline.
Tactic #3: The Automatic Uplift Clause
Buried in your Master Service Agreement are automatic renewal and price increase provisions. These clauses can escalate your costs by 3-7% annually: without any renegotiation, without any added value, and often without you even noticing until the invoice arrives.
The Counter-Move: Scrutinize your MSA for these provisions immediately. Calendar your renewal dates with 6-month advance alerts. When you do renegotiate, explicitly address these clauses and push for caps on annual increases or elimination of auto-renewal terms entirely.
Tactic #4: The True-Up Surprise
True-up clauses sound reasonable: you pay for what you actually use. In practice, they're a landmine waiting to explode your budget.
Without careful tracking, you might add users throughout the year thinking you're within your allocation: only to receive a six-figure true-up invoice at renewal. Salesforce counts on organizations losing track of their usage, and they're rarely wrong.
The Counter-Move: Implement quarterly internal audits to track actual usage against your contracted terms. Better yet, negotiate true-down rights into your contract: the ability to reduce licenses if your needs decrease, not just pay more when they increase.
Tactic #5: The Bundle Trap
This is one of Salesforce's most effective plays. Your rep will offer a "significant discount" on your renewal: but only if you bundle it with additional products, users, or support tiers you didn't ask for.
"I can get you 15% off, but only if we include Marketing Cloud in this deal."
Suddenly, your "discounted" renewal costs more than your original contract, and you're locked into products you may never fully deploy.
The Counter-Move: Flip the script. Bundle your own negotiation asks strategically. Combine price discussions with user alignment, unused license returns, true-down rights, and multi-year price caps. When you present a comprehensive counter-proposal, you gain leverage instead of surrendering it.
Tactic #6: The Support Plan Squeeze
After your initial contract term, Salesforce will push hard to maintain: or upgrade: your Premier or Premier+ support plan. They'll cite "business continuity" and "access to expertise" as justifications.
Here's what they won't tell you: most organizations' support needs drop dramatically after the first year. Your admins get trained. Your users figure things out. The urgent tickets become routine questions.
The Counter-Move: Reassess your support plan annually based on actual ticket volume and complexity. Many enterprises can safely downgrade from Premier to Standard support after their initial term, saving significant budget while reducing upsell pressure from the support team.
Tactic #7: The Middleman Mirage
Your Salesforce account executive seems like your advocate. They're friendly, responsive, and always willing to "go to bat for you" on pricing.
Here's the reality: your AE has almost no authority to offer meaningful discounts. Real decisions happen at the SVP & EVP level in conjunction with Salesforce's Business Desk: a team you'll never meet directly. Your rep is an intermediary who controls the flow of information in both directions, and that information asymmetry benefits Salesforce, not you.
The Counter-Move: Develop clear, logical, outcomes-oriented messaging and ensure everyone your rep contacts delivers it consistently. Document everything in writing. When you hit a wall, escalate directly to the Business Desk through formal channels rather than relying on your rep to "see what they can do." This practice is an art and not a science...we have perfected the practice at TNG.
The Preparation Equation
Here's the framework that separates enterprises who get crushed in Salesforce renewal negotiations from those who walk away with favorable terms:
Spend 75% of your time on preparation. Only 25% on the actual negotiation.
That means:
- Building a comprehensive Salesforce CRM Solution Blueprint (specific editions, feature sets, user counts, and measured value for each application)
- Conducting honest internal assessments of what you actually need vs. what you're currently paying for
- Researching competitive alternatives: not necessarily to switch, but to establish credible leverage
- Aligning your executive team on priorities and walk-away points
Without this preparation, you're bringing a spreadsheet to a gunfight.
Why Impartiality Matters
At The Negotiator Guru (TNG), we don't sell Salesforce. We don't resell licenses. We don't take referral fees from vendors. Our only interest is getting you the best possible deal.
That impartiality is why our Right Price Benchmarking™ data is trusted by enterprises across industries. We know what companies like yours actually pay: not what Salesforce says companies pay.
When you walk into a negotiation armed with real benchmark data and proven counter-tactics, the dynamic shifts. Suddenly, you're not reacting to Salesforce's playbook. You're executing your own.
Ready to Take Control of Your Next Renewal?
Salesforce renewal negotiations don't have to be a losing battle. With the right preparation, the right data, and the right strategy, you can counter every tactic in their playbook and protect your organization from unnecessary spend.
If you're facing a Salesforce renewal in the next 6-12 months, now is the time to start preparing. Check out our Salesforce vendor spotlight for more insights, or explore our enterprise contract renewal solutions to see how we can help.
Because in Salesforce contract negotiation, the prepared win. Everyone else just pays the price.
Inc. Magazine Unveils Its First-Ever List of the Midwest’s Fastest-Growing Private Companies— The Inc. 5000 Series: Midwest
The Negotiator Guru Ranks No. 15 on the inaugural 2020 Inc. 5000 Series: Midwest
NEW YORK, March 25, 2020 – Inc. magazine today revealed that The Negotiator Guru is No.15 on its inaugural Inc. 5000 Series: Midwest list, the most prestigious ranking of the fastest-growing private companies in Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.
Born of the annual Inc. 5000 franchise, this regional list represents a unique look at the most successful companies within the Midwest economy’s most dynamic segment—its independent small businesses.
“We’re honored to be recognized in the Inc. 5000 list as one of the fastest growing private companies in the Midwest,” said Dan Kelly, Founder and Senior Partner. The Negotiator Guru also ranked #2 in the state of Minnesota and #5 in the category of Business Products and Services. “Our success is a direct result of the value we’ve delivered with, and for, our global enterprise client base. Congratulations to the TNG team!”
The companies on this list show stunning rates of growth across all industries in the 12 Midwest states. Between 2016 and 2018, these 250 private companies had an average growth rate of 360 percent and, in 2018 alone, they employed more than 27,000 people and added $13 billion to the Midwest’s economy. Companies based in the Chicago, Detroit, and Cincinnati areas brought in the highest revenue overall. Complete results of the Inc. 5000 Series: Midwest, including company profiles and an interactive database that can be sorted by industry, metro area, and other criteria, can be found here starting March 25, 2020.
“The companies on this list demonstrate just how much the small-business sector impacts the economies of each Midwest state,” says Inc. editor in chief Scott Omelianuk. “Across every single industry, these businesses have posted revenue and growth rates that are beyond impressive, further proving the tenacity of their founders and CEOs.”
About The Negotiator Guru
The Negotiator Guru is the leading advisory firm for Salesforce contract negotiation. Our team of Senior IT Sourcing Experts provides industry leading IT contract negotiation services for a global client base. Clients engage us to source, negotiate, and manage highly complex IT contracts, transactions and suppliers. Through our deep business understanding and senior expert negotiation skills, we work closely with clients to deliver immediate and long-lasting financial impact to all stakeholders.
Founded in 2015, The Negotiator Guru is a private company based in Minneapolis, Minnesota. For more information, visit www.thenegotiator.guru. More about Inc. and the Inc.
5000 Regional Series
Methodology
The 2020 Inc. 5000 Regional Series is ranked according to percentage revenue growth when comparing 2016 and 2018. To qualify, companies must have been founded and generating revenue by March 31, 2016. They had to be U.S.-based, privately held, for profit, and independent—not subsidiaries or divisions of other companies—as of December 31, 2018. (Since then, a number of companies on the list have gone public or been acquired.) The minimum revenue required for 2016 is $100,000; the minimum for 2018 is $1 million. As always, Inc. reserves the right to decline applicants for subjective reasons.
Ready to explore joining the TNG family?
Contact us today to set-up a client intake assessment where we identify your cost savings opportunity for free!
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About Inc. Media
The world’s most trusted business-media brand, Inc. offers entrepreneurs the knowledge, tools, connections, and community to build great companies. Its award-winning multiplatform content reaches more than 50 million people each month across a variety of channels including websites, newsletters, social media, podcasts, and print. Its prestigious Inc. 5000 list, produced every year since 1982, analyzes company data to recognize the fastest-growing privately held businesses in the United States. The global recognition that comes with inclusion in the 5000 gives the founders of the best businesses an opportunity to engage with an exclusive community of their peers, and the credibility that helps them drive sales and recruit talent. The associated Inc. 5000 Conference is part of a highly acclaimed portfolio of bespoke events produced by Inc. For more information, visit www.inc.com.
Why are Companies Hesitant to Engage Outside Consultants?
Why is it that companies are sometimes resistant to engaging with a cost savings firm like The Negotiator Guru (TNG)? Furthermore, why is it that a company refuses to engage with an advisory firm (like TNG) after they know there is a guaranteed ROI? Is there any rational reason for this or is it purely an emotional response?We at TNG find ourselves asking these questions far too often…
We know humans can be complicated (😊), but we wanted to dig deeper into what sometimes appears to be irrational behavior that negates shareholder value creation opportunities. As a result, we conducted ethnographic research on the cause of this behavior with the intent of identifying key trends, by persona. Here are a few of the key insights we discovered:
- IT Leadership (CIO, VP of IT, etc.) fears they will hurt the relationship with the software publisher/service provider leading to service degradation.
- Purchasing/Procurement/Sourcing representatives have huge egos and thrive on taking credit internally. Furthermore, they are worried about their job security if someone else can achieve a greater result.
- CFOs think they only way to achieve such savings is by changing vendors (ex: Salesforce to Microsoft) or by cutting products/services.
- Business leadership think it will take too much time to achieve the prospective savings which will negate the realized ROI.
- Executives at publicly traded companies are generally risk adverse and think it’s safer to use a big 4 consulting firm (that’s already “in the system”) even though they will likely cost more and achieve much less (since they’re a generalist vs. specialist).
We’ve heard different variations of these key objections for years. What makes us most proud is that some of this feedback came from a few of our past clientele who decided to overcome their natural resistance as they knew what was best for their organization. Per the recommendation of these past customer respondents, we've outlined what they experienced (vs. initial perceived resistance):
- Vendor Relationship – While it may be slightly uncomfortable at the beginning (depending on how much Right Sizing and/or Right Pricing opportunities TNG identifies), the vendor relationship and service quality improves at the conclusion of the TNG engagement. The vendor is engaged with the customer in a strategic manner and the customer can now feel confident they are only paying for what they need at a fair price.
- Procurement Job Security – TNG acts like a force multiplier for existing Procurement teams. As such, TNG simply seeks to enable high impact results vs. seek credit.
- Vendor/Product Change – Vendor changes are extremely rare. TNG simply identifies how internal stakeholders use the respective software platform (via their proprietary persona analysis) and identifies cost savings opportunities without sacrificing functionality/service quality.
- Time/Cost to Achieve – Internal business stakeholders are rarely involved in the process after the Discovery phase is complete.
- Niche vs. Generalist – The speed and consistency in which TNG can delivery results is a direct result of their focus and dedication focusing on their core competency, such as Salesforce.
Interestingly, our analysis identified the following key insights regarding business leaders' intention for engaging an outside advisory firm (summarized for brevity):
- IT Leadership sometimes feel uncomfortable being the “tough voice,” so they hire a 3rd party who brings the credentials to speak from an authoritative position.
- C-Suite Executives simply want to motivate (prove to) their Procurement/Business Teams that the “great deal on the table” is not so great after all.
- Procurement leadership wants to be armed with accurate price benchmarking or contract term knowledge. They recognize they can’t be experts in everything and value niche expertise from specialists vs. generalists.
- Board members want to do anything possible to reinforce their fiduciary duty to their shareholders…this includes identifying, and executing on, every available cost savings opportunity.
- Contract negotiators want to understand the software publisher’s sales playbook and internal incentive process…not just general market intelligence.
We hope that you find these key insights helpful as you contemplate and reflect on your own personal resistance to engaging an outside advisory firm. TNG prides itself to make every engagement as risk-free as possible for our clients. Furthermore, TNG will only accept a client if we know there is a major impact opportunity…if not, we will simply give you some free advice. Ready to explore joining the TNG family? Contact us today to set-up a client intake assessment where we identify your cost savings opportunity for free!
Start with a CIA.
That’s a Client Intake Assessment.
Upload your contract data or schedule a discovery call. If we can’t identify at least a 10%+ from a TNG Right Pricing™ opportunity, we won’t take your money (but we will offer you some free advice!)
