Rightsizing Your Spend with Salesforce

Quantity and price influence total cost

The total cost for Salesforce's products is influenced by two important variables: price and quantity. Often businesses believe that price alone is what keeps them from reducing their costs with Salesforce. The reality is that quantity is equally important in the total cost equation. Salesforce representatives are very good at manipulating volume to increase the costs in an agreement. To ensure that a business is getting the best deal it is essential to ensure that they have calculated the right quantity for their requirement. Organizations must carefully evaluate if they genuinely require the licenses that are purchasing or have purchased?

Common mistakes organizations make with regards to quantity:

1. Under-purchasing
2. Over-purchasing

Under-purchasing:

Under-purchasing can occur when customers are hyper-sensitive to the risks of over-buying. These customers rarely forecast for license growth and tend to purchase licenses as they are needed. Without forecasting for license growth, businesses eliminate a significant negotiating lever. Buying licenses as needed removes your organization's ability to alter the timeline of negotiations, providing little reason for Salesforce to give you additional concessions. A best practice in SaaS purchasing is to save your growth for one large, consolidated purchase. This will give your business the leverage to impact pricing and negotiable terms. Mentioned below are some common salesforce products that are often under purchased:

1. Super messages
2. Community licenses
3. Sales/service cloud add-ons

Over-purchasing:

Many businesses fall into the over-purchase trap because Salesforce offers a lot of functionalities that excite customers. However the only way to access these features is through multiple add-on purchases. These multiple add-on products get factored into your business's forecasts and affect the accuracy of
your requirement. It's important for business to distinguish between what is truly required versus what would be a “nice to have.” The hype for Salesforce products can lead to impulsive buying behavior, which can lead to pockets of licensing that is rarely used.

Irrespective of how well priced your deal may be, if you are not using the products purchased then the deal cannot be a success. Effective discount level, meaning the unit cost a customer achieves based on the licenses being utilized, is the best indicator of a competitive deal. Often deals with the highest discount levels report high levels of under-utilization over the term. Mentioned below are common salesforce products that are often over purchased:

1. Service/Sales cloud
2. Community licenses
3. Einstein analytics
4. Commerce cloud (B2C)

By forecasting demand accurately, businesses can avoid the negative impacts of both over and under purchasing. Download this white paper by clear edge to learn more about the how you can accurately forecast demand and get the best deal from salesforce in terms of price as well as quantity.