Negotiating with Salesforce - Seven things you need to know about how Salesforce looks at a deal
Salesforce is good at negotiating. So your chances of getting a good deal are enhanced by understanding how they look at a deal and their goals. Your Salesforce Account Executive will lead the team you are negotiating with, in close coordination with his or her manager. This team is your path to getting the best overall deal. And while they are trained to maximize Salesforce revenue, they won’t get paid unless you make a purchase. So if you ask the right questions, and provide information that can help them get to a discount level you are comfortable with, this is the win-win situation all are striving for.
The remainder of this article provides some guidelines and background that will help you to get there.
1. Salesforce sales teams earn commissions on incremental revenue
Account Executives (also called “reps”) and their management are paid based on incremental revenue, not total revenue. If you don't buy additional licenses (or spend additional money), they don't earn commissions. More specifically, if your total spend this year is not more than last year’s, they don’t earn commissions this year. They are indifferent to whether you purchase licenses for more users, add-ons licenses for existing users, or you swap out one type of license for another, as long as the total spend is more. This is actually a good thing for the customer because it gives you more leverage and allows you to adjust your purchasing to your needs.
2. Salesforce AE’s are paid when the deal is signed
SF reps and management are paid in advance for the 12-month value of whatever you are deploying now. While they will ask for a longer contract such as three or five years, they are open to a shorter term, since most, if not all of their commissions are based on first-year revenue only. This varies from year to year, but the first year is always more important.
3. Timing matters
Salesforce's fiscal year ends in January. While this may seem strange, it is actually quite intentional. They can work with a customer the entire year to justify a new purchase, and wait until that customer's new fiscal year starts in January when the budget becomes available. And since the sales team gets paid on an annual quota they are quite happy with January deals. This often leads to very large February commission checks!
But it's not only the end of the year that matters, as management and reps are often encouraged through bonus payments to close deals at the end of a quarter.
Customers can take advantage of this quarter and year-end effect by asking for and often getting discounts that would otherwise not be available.
4. Discount authority is distributed
There are many articles in the public realm indicating that the rep has no power, and all of the decision-making lies with a special team that has the authority. This is not quite correct. Your rep has access to a discount/approval matrix indicating what level of discount is available, by license and quantity, and what organizational level is needed to approve it. They know how much of a discount they can get approval for, and whom they need to get that approval from.
In general, each level of management has a specific level of discount they can approve. So for example, for a given size deal, your rep may be able to offer you a 10% discount without additional approval. His manager may be able to approve an additional 5%, and each level of management above can offer some additional discounting. The special approvals team is involved only when a deal requires additional discounting, beyond what a given size of deal and management level can approve. A good rep knows how to work this structure, and will do so to get you the best deal they believe they need to have to get your signature.
So while the rep doesn't necessarily have the authority to grant you the discount you might want, they are your advocate and absolutely control the path to get you a better deal. So keep pushing and asking for more - as you get closer to year-end or quarter-end, more of the management will be interested in helping your rep get you a bigger discount. And it is highly likely that your rep’s manager (Salesforce calls the first-line sales manager a “Regional Vice President”, or “RVP”) is fully knowledgeable about every deal, so going above the rep does not necessarily get you better discounts.
5. Discounts depend on both deal size and customer size
Larger deals and larger customers generally get larger discounts. The combination of order size and customer spend leads to the discount they might offer you for a particular purchase. For example, a $100k purchase from a customer spending $2M annually will likely get a larger discount than that same $100k purchase from a customer spending $500k annually.
Conversely, a $2M customer making a $10k purchase may get a larger discount than a $100K purchase made by a new customer.
While deal size determines the discount level, customer size determines where the discount level for the deal starts.
6. Consolidating purchases increase your discount
Salesforce loves it when you make lots of little purchases. Each one is considered as if it were the only purchase you are making, and thus separate individual purchases lead to higher overall spend (see #5). When you are about to make a purchase, be sure to consider if any other groups in your organization are doing the same, as well as purchases you might be making in the short term future. If you can consolidate the orders into a single request, your deal size goes up, and your discount level will likely improve.
7. Consider near term future demand in your current purchase
As an extension to the previous point to consolidate your purchases, this can be extended to include purchases that will likely be made in the next few months or even the next year. Providing this to the account team will allow them to provide several options to you, and you will be able to see larger discount levels that might be available to you. This will likely include making the full year’s purchase upfront, which will lower your cost per license, but potentially increase your short-term spend.
The downside of advancing purchases before you need them is that there will be licenses that are unused for part of the contract term. You can then compare which is better for you, both in the short term and the long term, since your renewals will start from a lower price per user. You may find that even though some licenses are unused for a time, your overall cost is lower, especially when you consider the cost of several years in the future. Most good account teams will be able to provide you sufficiently better deals to make this worthwhile for you to make the purchase up front. And since you have already paid for the licenses, the faster you can deploy them, the more you will benefit, without incurring additional costs.
Bonus - Not all licenses need to be activated concurrently
Let's say you are planning on deploying 900 licenses in the next 12 months, with a schedule of 300 in month 1, 300 in month 4, and 300 in month 7.
You will almost always get a better price if you purchase all 900 at once, rather than 3 purchases of 300, but you will end up with licenses that you are paying for and not using for some of this time. Conversely, if you make three purchases, you are not paying for anything prior to actually deploying them, but the cost per license will be higher.
A better option is often available that combines the best of both. You can agree to purchase the 900 licenses in a single order but delay the activation dates for the licenses you will not be activating in the next few months. Your order form will have three line items, one for each activation date. But since your discount will be based on the full 900 license purchase, they will all be less expensive, and you are not paying prior to when you need them! Salesforce calls this a “staggered deal” structure.
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Are You Making These 5 Fatal Mistakes with Your Salesforce Enterprise License Agreement?
Your Salesforce Enterprise License Agreement (SELA) could be costing you millions more than it should. While these multi-year deals promise predictable pricing and enterprise-grade support, they're riddled with traps that can drain your IT budget faster than you can say "CRM transformation."
As someone who's seen countless enterprises stumble through salesforce renewal negotiations, I can tell you that most organizations make the same critical mistakes, and pay dearly for them. Whether you're a CIO planning your next renewal or a CFO trying to control spiraling software costs, these five fatal errors could be sabotaging your bottom line.
Mistake #1: The Baseline Trap, Overcommitting Based on Inflated Projections
Here's how it usually goes: Salesforce looks at your current usage, adds a "growth buffer," and locks you into user counts that seem reasonable today but become millstones tomorrow. This baseline trap is the most expensive mistake you can make in salesforce contract negotiation.
The problem? You're committing to licenses you may never use, and your per-user pricing gets locked at rates based on inflated projections. I've seen companies commit to 2,000 users when they realistically need 1,200, just because their sales rep painted a rosy picture of "inevitable growth."
The Fix: Negotiate growth as an option, not a requirement. Structure your SELA so you commit to baseline usage (say, 1,000 users in Year 1) with optional tiers that trigger only when specific business events occur: like a new subsidiary acquisition or product launch.
For example: "Client commits to 1,000 users in Year 1. If the European expansion launches by Q2, user count increases to 1,200. Otherwise, Year 2 renews at 1,000 users with the same discount structure."
Mistake #2: Ignoring Overage Penalties and Price Escalations
Most executives focus on the upfront discount and completely overlook two budget killers hiding in their SELA: overage fees and automatic price increases.
Salesforce charges overage fees at current retail pricing: often 2-3x your negotiated rates. Exceed your licensed user count by just 10%? You're paying full retail for those extra seats. Meanwhile, most SELAs include automatic 7% annual price increases that compound over multi-year terms.
I recently worked with a Fortune 500 company that discovered they were paying $400,000 annually in overage fees: money that could have funded their entire digital transformation initiative.
The Fix:
- Cap annual price increases at 3% maximum (better yet, negotiate them out entirely)
- Pre-negotiate true-up rates at your discounted SELA pricing, not retail
- Build in a 90-day grace period for overages to avoid surprise charges
- Require monthly proration for any mid-year additions
Mistake #3: Accepting Zero Transparency in Pricing
Traditional Salesforce agreements show line-item pricing for each product. SELAs? They bundle everything into a fixed-fee structure that makes it nearly impossible to understand what you're actually paying for.
This lack of transparency isn't accidental: it makes price manipulation during renewals much easier. Without clear visibility into per-product costs, your procurement team can't effectively benchmark pricing or negotiate specific components.
The Fix: Demand a comprehensive License Entitlement Matrix upfront that includes:
- Product SKUs and specific feature tiers
- User allocations by business unit
- Clear limitations and exclusions
- Baseline metrics for salesforce benchmarking against industry standards
Don't accept vague product bundles. If Salesforce won't provide transparency, that's a red flag that their pricing isn't competitive.
Mistake #4: Signing Away All Contractual Flexibility
SELAs are rigid by design. Once signed, you cannot scale down user counts, change product mixes, or adjust to business realities. If your company decides mid-contract that you only need 500 licenses instead of 1,000, tough luck: you're paying for all 1,000 until renewal.
This inflexibility becomes especially problematic during economic downturns, restructurings, or strategic pivots. I've watched companies pay for thousands of unused Salesforce licenses while laying off employees.
The Fix:
- Negotiate true-down clauses allowing 10-15% user reductions at renewal without penalties
- Structure deals as 2+1 years (two firm years plus a one-year extension option) rather than hard three-year commitments
- Include mid-term checkpoints at 18 months to reassess volumes and usage
- Ensure all product add-ons co-terminate on the same renewal date
Mistake #5: Falling Into Product Bundling Traps
Salesforce loves bundling products together to justify bigger discounts, but these bundles create dangerous dependencies. Your contract might stipulate that dropping Tableau causes your Sales Cloud discount to revert from 50% to 30%. Every product becomes intertwined, making optimization nearly impossible.
I've seen companies stuck paying for Marketing Cloud licenses they never use because unbundling would eliminate their discount on Service Cloud: creating a perpetual cycle of waste.
The Fix:
- Keep product terms independent: losing one product shouldn't affect pricing on others
- Use bundles strategically for initial discounts, but retain the right to separate components at renewal
- Document clear exit strategies for each bundled product
- Negotiate that discounts carry over when breaking bundles into standalone renewals
The Documentation Mistake That Costs Millions
Here's a bonus mistake that underlies all the others: relying on verbal promises from Salesforce sales reps.
"We usually don't enforce that clause." "We'll work with you if that situation comes up." "Trust me, we're flexible on overages."
If it's not written in your contract or order form, it doesn't exist. Period.
The Fix: Demand that every concession, promise, and "understanding" be documented in writing. If your sales rep claims flexibility exists, prove it by adding contract language that guarantees it.
Taking Control of Your Salesforce Investment
These mistakes aren't inevitable: they're the result of approaching salesforce enterprise license agreement negotiations without proper preparation and expertise. The key is treating your SELA like the multi-million dollar strategic decision it is, not just another software renewal.
Before your next negotiation:
- Conduct a thorough contract risk review of your current terms
- Benchmark your pricing against industry standards
- Assemble a cross-functional team including IT, finance, procurement, and legal
- Document your actual usage patterns and realistic growth projections
Remember, Salesforce's sales team negotiates these deals every day. You might do it once every three years. The playing field isn't level unless you have the right strategy and support.
Your SELA should be a strategic enabler, not a financial anchor. By avoiding these five fatal mistakes, you can maintain the predictability and enterprise features you need while protecting your organization from unnecessary costs and inflexible terms.
The stakes are too high to get this wrong. Make sure your next Salesforce negotiation puts your organization in the driver's seat, not the passenger seat.
Need help navigating your Salesforce renewal? Our enterprise contract renewal specialists have saved organizations millions in unnecessary software costs. Learn more about our saas negotiation consulting services.
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.
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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.
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