Sourcing and vendor management leaders negotiating SaaS contracts often assume that terms related to payments are non-negotiable. Achieve savings, a better deal structure and quicker closure by including specific requirements for payment terms, holidays or profiles early in the buying cycle.
- Negotiate an Appropriate Free or Reduced Charge Period ("Payment Holiday") in Any Significant SaaS Purchase Where the Implementation Schedule Is Estimated to Be Longer Than Six Months, Ideally Linked to Anticipated Implementation Dates
- Emphasize Payment Holiday Requirements in Any RFx for Complex SaaS Engagements Likely to Take Six Months or More to Implement
- Pursue All Payment Options With SaaS Vendors — Such As Monthly or Quarterly Payments and Some Form of Consumption-Based Pricing — If You Expect Nonlinear Demand to Ensure Costs Mirror Demand
- Include Payment Terms of 45 days or More in Your Negotiation
- Negotiate a 3% to 5% Maximum Renewal Price Uplift Cap in All SaaS Contracts, Applied on Any Multiyear Renewal, for the Whole Term and Not Annually
Gartner Recommended Reading
©2021 Gartner, Inc. and/or its affiliates.
All rights reserved.
Gartner is a registered trademark of Gartner, Inc. and its affiliates.
This publication may not be reproduced or distributed in any form without Gartner’s prior written permission.
It consists of the opinions of Gartner’s research organization, which should not be construed as statements of fact.
While the information contained in this publication has been obtained from sources believed to be reliable, Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information.
Although Gartner research may address legal and financial issues, Gartner does not provide legal or investment advice and its research should not be construed or used as such.
Your access and use of this publication are governed by Gartner’s Usage Policy.
Gartner prides itself on its reputation for independence and objectivity.
Its research is produced independently by its research organization without input or influence from any third party.
For further information, see
Guiding Principles on Independence and Objectivity.