Pricing Overview

Introduction

Background and Product Information

• Following acquisitions and numerous rounds of product development, Salesforce’s true product breadth is far-reaching and covers almost all corners of the Sales and Marketing Saas space. They have purchased Slack, Tableau, Mulesoft, and more, but this summary will focus on what you may find in a core contract.
• Salesforce contracts take different forms, but they routinely feature products in a Sales/Service Cloud capacity, Marketing Cloud, Revenue Intelligence, or B2B/B2C Commerce. In some instances, these feature sets may appear on the same contract, while in others, they may be kept on separate order forms as a result of governance by different MSAs.

Pricing Model and Packages

• Sales/Service Cloud contracts: Salesforce has the following tiers that involve varying levels of feature sets, storage, support, AI, and core product functionality:
  • Starter Suite: Account, contact, lead, opportunity management ($25 per Sales or Service Cloud license list price)
  • Pro Suite: Account, contact, lead, opportunity management, Premier Success available as an add-on ($100 per Sales or Service Cloud license list price)
  • Enterprise: Account, contact, lead, opportunity management, 20MB Data storage per user, and partial sandbox included. Premier Success and full sandbox available as an add-ons, forecast and pipeline management, AI and other features available for purchase ($165 per Sales or Service Cloud license list price)
  • Unlimited: Account, contact, lead, opportunity management, Premier Success, a full and partial sandbox, sales engagement and conversation intelligence, and 120MB Data storage per user included, forecast and pipeline management, AI and other features available for purchase ($330 per Sales or Service Cloud license list price)

All Salesforce packages feature a mix of per user costs, “% of the contract” costs, and usage costs.  

• Examples of line items that follow a “per user” cost include: Sales or Service Cloud, CPQ or CPQ+, Einstein, Maps, Slack, Tableau, Inbox, Data Backup.
• Examples of line items that follow a “% of contract” cost include: Support, Sandboxes (Partial and Full), Event Monitoring, Shield, and Audit Trail.
• Examples of line items that are usage based costs include: Data Storage (500MB or 10GB), API Calls, Super Messages, SMS/MMS, and Heroku Connect Rows/Dyno Units.

Target Prices for Various % Based Line Items:

Most percent based SKUs are a percentage of the contract total, minus usage based items.  Below are some targets to keep in mind when negotiating these add-ons.  Ability to land in the target ranges below is dependent on existing SFDC footprint and spend volume but achieving the below targets would typically constitute favorable pricing:

• Premier Support List: 30%; Target: 10-15%
• Full Sandbox List: 30%; Target: 7-12%
• Partial Sandbox List: 20%; Target: 5-10%
• Event Monitoring List: 10%; Target: 3-6%
• Audit Trail List: 10%; Target: 3-6%

Marketing Cloud Contracts

• Marketing Cloud Engagement: Email marketing, content creation and reporting & analytics ($1,250 per org monthly list price)

• Marketing Cloud Account Engagement: Lead nurturing and scoring, engagement history and dashboards, and reporting & analytics, up to 10,000 contacts ($1,250 per org monthly list price)

• Marketing Cloud Growth Edition: AI-powered emails and campaigns, multi-channel marketing, forms and landing pages ($1,500 per org monthly list price)

B2B Commerce Contracts

• Commerce Cloud Growth: 6 storefronts, order management lite, analytics and automation (1% Gross Merchandise Value)

• Commerce Cloud Advanced: 10 storefronts, full order management, advanced analytics and automation (2% Gross Merchandise Value)

• Commerce Cloud B2C Premium: Unlimited storefronts, full order management, advanced analytics and automation (Percentage to be negotiated)

• Special Terms
  • 9% uplift: Salesforce has mandated a 9% uplift at time of renewal. Their requirement for removing the uplift is predicated on anticipated growth, which needs to be 15-20% or more in spend from the current ARR.
  • Uplift Cap: Some customers have been successful including uplift cap language in their renewal order form. This language prevents Salesforce from increasing the uplift during the next renewal beyond a certain percentage. While Salesforce will typically start with the cap being set at 9%, the floor that they’ve been willing to honor is 5%.
  • Pricing Schedule: An attachment on the order form known as the pricing schedule should be a part of every agreement. This is a chart that shows the pricing honored by Salesforce for certain volume bands. While rare, Salesforce may be willing to include a tier in the pricing schedule that shows the guaranteed rate available with additional volume. This provides a bit of visibility and security in knowing what your team will have to pay for more licenses.

General Strategy

1. Early Engagement and Contract Timing

• Engage early with Salesforce, especially considering early renewals as they can push for concessions. Timing your negotiations to align with Salesforce's fiscal year end in January can also yield better rates and terms.
• Renew before your current contract expires to leverage potential early renewal discounts or to avoid upcoming price increases.
• Early engagement allows for more time to negotiate, communicate changes, and if necessary, explore alternatives to the current products being purchased. Salesforce is sticky and requires immense resource allocation to conduct a migration off of their software while keeping your Sales Organization functioning. Transitions to a new supplier include switching costs and countless hours of labor to ensure there is no service disruption to your CRM.

2. Leveraging Growth and Multi-Year Commitments

• Highlighting contract growth and committing to multi-year contracts are powerful levers. Salesforce is receptive to discounts for both increased user licenses and adding new products or features.
• Multi-year terms in more recent years with Salesforce have resulted only in price locking.
• Utilize forecasted growth or an increase in license count to negotiate better rates, especially to mitigate or waive the standard 9% uplift Salesforce applies to renewals. Make sure to communicate that expansion or potential for new use cases as an opportunity for Salesforce.

3. Right-Sizing and Utilization

• Right-size your contract by removing unused licenses and waste, leveraging usage reports from Salesforce to reflect actual needs. This strategy not only streamlines your costs but can also be a negotiation point to adjust pricing.
• Consider reducing your usage where possible, especially if paying list price, and leverage this as a bargaining chip to secure better terms.

4. Negotiating Terms and Conditions

• Push for better billing terms, such as quarterly or semi-annual payments, despite Salesforce's preference for annual billing. This can improve your company's cash flow management.
• Salesforce’s standard terms are Net 30, Annual, but both have been successfully negotiated by customers looking to improve their cash flow.
• Request a price cap in the order form to limit future price increases, aiming for a cap as low as 0% and negotiating up to a 5% maximum. Salesforce typically does not offer this for less than a 24-month term or with contract reductions, but it's worth pushing for.

5. Utilizing Competitive Pressure and Special Events

• Use competitive quotes and the urgency of signature timelines to pressure Salesforce into offering more aggressive discounts. Understand that competitive quotes utilized for incumbent products under 9 months out from renewal will likely not change Salesforce's behavior, as they know how hard it is to move away from their core SKUs.
• Leverage special events, like Salesforce's end of fiscal year or acquiring new products like Spiff, as opportunities to negotiate better terms due to their increased motivation to close deals.
• Competitive pressure is most effective when discussing specific products and not the entirety of your CRM or Marketing software requirements, where Salesforce may be weaker when compared to other products on the market.

Custom Strategies

Regarding Renewal Reductions

1. Start early, gather information on usage
2. You’ll want to start your discussion early with Salesforce if you wish to reduce your volume with them or deprecate features.
3. Before that can happen, you should ensure you have a strong understanding of your usage. Request a usage report from Salesforce or from your admin view, run an audit yourself.
4. Determine 3 Numbers
   1. How many licenses are purchased
   2. How many licenses are provisioned
   3. How many licenses are in active use in the past 30 days
5. Evaluate historical usage & future requirements to determine needs for renewal
   1. Once you know your usage, combine it with your forecasts in the coming months. If you need to remove a few licenses in order to right-size, they may be offset by a future hiring need. Combine your subtractions with your additions and determine what your net reduction will look like.
   2. You should attempt to build in a slight buffer in case needs change, and you need a Sales Cloud license ASAP, for example, and do not wish to work through a portal or a representative to secure one.
6. Communicate an exaggerated reduction to Salesforce
   1. If you are looking to reduce your Sales & Service Cloud Enterprise licenses by 20% in order to remove waste and control your spend, gear up for an increase in the rate per license. The amount by which Salesforce will increase your rates is arbitrary, and varies from customer to customer, rep to rep, and renewal to renewal. There does not appear to be a standard formula that determines how much the cost per license will go up based on a reduction in volume.
   2. Therefore, it’s important to ask for an exaggerated reduction, lower than what your team truly requires for the renewal. If the cost goes up $5 per license whether you are removing 10 licenses or 75, asking for a quote with more removed than you need to drop allows you to add a few back over the course of negotiations in order to control the uplift.
   3. If pressed, you can tell Salesforce that you’re looking to right-size the contract beyond just what appears to not be in use, and that costs are top of mind for your company. If you can include future growth into the renewal, you will later, but for now, you need to see a quote with a large reduction in volume.
7. Build back licenses
   1. Over the course of the next few weeks, begin to add back licenses to the renewal. The goal here is to get Salesforce to incentivize you to reduce your downgrade. They’ll be looking to turn a large downgrade into a small one, as that is seen as a win internally. Your rep may be rewarded for doing so.
   2. This offers you unique leverage. Adding back licenses as a “give” during negotiations, in increments, can help get you as close as possible to your original rate.
   3. Begin using figures in your negotiation and force Salesforce to confront them. If you reduced Service Cloud Unlimited licenses by 40% and the line item in total has only dropped 8% in cost, there is a large gap Salesforce needs to explain away. Adding more licenses back, you could inform Salesforce that you’d be willing to make that reduction only 30%, but costs need to drop 25%.
8. Reference total cost of ownership as a reason for getting the best rates
   1. Reducing your account size is never fun, and certainly not something any company intends on doing from the onset of signing a contract. It’s a necessary measure to protect one’s business.
   2. That said, it doesn’t negate all of the dollars you’ve committed in the past. Salesforce should be reminded that, especially if you’ve had a long relationship, plenty of dollars have been spent with them, and that you’re still looking to invest a considerable amount if your business partner. Salesforce should not discard all discounting, and keep in mind the existing relationship when determining how to price the contract following the contraction.
9. Bring in leadership and budgets
   1. Should your pricing still be off the mark, pull in leadership; a VP of Finance, CFO, or someone who has a say in the budget. Salesforce cares about executive alignment and will take their opinion seriously.
   2. Have your leadership communicate the budget, or reinforce the initiatives or circumstances that led to a downgrade. They can reassure Salesforce that the future of the company is bright and therefore so is the account, but that the budget needs to be hit in order to allow for future growth.

1. Regarding Renewal Growth
   1. Evaluate forecast, requirements for renewal
      1. When you expect growth, you should use it as leverage to secure discounts on the incremental products or licenses you’re purchasing.
      2. Take a look at your forecast over the next 6 and 12 months. Determine what you may be willing to include in the upcoming renewal in exchange for a better rate, even if you don’t need the licenses right away.
      3. Your evaluation should also take into account needs for other products, features, API calls, data storage, and more. Depending on your needs, an upgrade could be a productive way to make one purchase instead of multiple purchases a la carte.
   2. Communicate a portion of growth
      1. If you expect to need 100 more licenses of Salesforce Inbox, it is best to request an order form from Salesforce for only 25. Salesforce does not have strict volume tiers, which means the next price break is up for negotiation. Adding all licenses at once might result in only one small offer for improved discounting. Communicating only a portion of the growth you require will allow you to reserve some of your leverage.
      2. Without showing your hand, negotiate the level of discounting on only the growth communicated. See if Salesforce is willing to improve the rate per license without offering other concessions. In doing so, you can establish a ceiling for the remainder of the negotiation.
   3. Communicate all of growth
      1. In sequence, ask for an order form for a larger chunk of your expected growth in exchange for a better rate. Repeat this step until you’ve given Salesforce all of the licenses you’re willing to commit to.
      2. Each time you repeat, ask Salesforce if there’s a better rate that can be achieved in exchange for the addition of the next bundle of licenses.
   4. If deemed valuable, use an upgrade to build leverage and consolidate spend and line items
      1. Salesforce has been interested in moving a lot of customers to higher tiers. Whether that’s from Marketing Cloud Engagement to Marketing Cloud Growth, or from Enterprise to Unlimited, upgrades unlock better economies of scale by taking individual spend and consolidating them into one SKU at a better rate.
      2. They have also been pushing to move customers to upgrade entirely different products and co-term those renewals together if they stand to see an increase in ARR. For example, the best discounting they may be willing to offer could include an upgrade to Unlimited for Service Cloud, Enterprise Grid for Slack, and timing both of those agreements to renew at the same time.
      3. Should your company truly need the things included in a higher tier, you should be in a good position to make larger asks for discounting.
   5. Payment and billing terms
      1. Salesforce is most negotiable on payment and billing terms during a new purchase, or when discussing growth in ARR.
      2. If making a move to a higher tier or adding licenses and therefore spending more with Salesforce, you may be able to improve your terms. Make the ask for quarterly billing or net 45 payment terms.
      3. The higher the spend on the contract, the more receptive Salesforce will be to allowing you to break payments up as a means of supporting growth.

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