Gartner Research

Protect Against Budget-Busting, Revenue-Based Software Pricing Metrics With These Three 'Must Do' Steps

Published: 01 February 2018

ID: G00351078

Analyst(s): Lori Samolsky , Bill Ryan


Sourcing and vendor management leaders negotiating software and cloud contracts via an unclear, revenue-based pricing metric face substantial risk and (unbudgeted) costs. Incorporating four key contractual terms will protect and mitigate future exposure to revenue metric risks and surprises.

Table Of Contents
  • Key Challenges


  • What Are Revenue-Based Software and Cloud Pricing Metrics, and What Is Driving Their Popularity?
  • For Most, the Risks of Revenue-Based Pricing Metrics Outweigh the Benefits


  • Publicize the Risks and Complexities of Revenue-Based Pricing by Communicating to Stakeholders the Key Questions to Ask Vendors
    • Scenario 1: You Acquired a New Client for Your Vendor
  • Prepare Your Organization for the Known Risks of Revenue-Based Pricing Metrics Through a Rigorous Evaluation of Existing Contracts
    • Scenario 2: The Definitional Disaster
  • Negotiate Four Key Contractual Terms to Protect Against the Downsides of Revenue-Based Pricing Metrics
    • Scenario 3: Getting to the Next Level Demolished the Value Proposition

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