What Procurement gets wrong about negotiating with SaaS providers

This blog post is part rant, part self-therapy. In my day job, I advise a large procurement team on technology procurement, so I’m regularly exposed to negotiations with your typical SaaS behemoth. What triggered this post is the fatalism I often experience from procurement professionals, business stakeholders, and lawyers when engaging with SaaS vendors. Simplistic talk, such as “they don’t need our business” or “it’s take it or leave it”, justifies taking a bad deal without trying. As a negotiator, this kind of talk makes my blood boil!

Let me be clear: I’m not denying that many SaaS companies have strong bargaining positions. They do. Moreover, their one-to-many business models depend on standardisation, which arguably limits the exceptions they can make. However, I do take issue with the idea that customers have no bargaining power. That’s simply untrue.

I say this as someone who used to sit on the other side of the table. I’ve negotiated on behalf of major SaaS providers for years, and let me tell you, exceptions were made. Plenty of them. Sure, it was “take it or leave it” for the business run out of Bob’s garage, but if the deal was (or had the prospect of being) worth more than a decent car, it got negotiated. High-value contracts were often substantially negotiated, even if everyone pretended otherwise.

Here’s the typical narrative painted by SaaS providers to stop you from negotiating:

We operate a standardised, one-size-fits-all model that simply can’t handle exceptions. We’re one platform, so if something goes wrong, it affects everyone. That’s why our liability is limited, we must avoid being financially annihilated in the event of a serious service failure, breach, or cyberattack, etc. We know our platform better than you do, so let us define the service specifications and performance standards. Since you’re not committing to a longer contract term or higher volumes, don’t expect a discount.

This negotiation stance isn’t completely false. But don’t be fooled into thinking it means there’s no room to move. You’ll just need to be laser-focused and proportionate in your asks, especially if you're not their biggest customer. As the buyer, here’s the counter-narrative you want to project:

We want to build a long-term and expanding relationship with your company, potentially involving other entities in our group. We understand your platform is standardised, but it’s critical to our operations; if it fails, it takes us down with it. Therefore, liability positions must reflect the potential harm to us. This isn’t just about operations; it’s about risk. We’re paying for this, and we shouldn’t be expected to assume all risk of failure. We are not in a rush but can move to signature fast if the deal is right.

So, how do you get a SaaS provider to make concessions?

Remind the SaaS provider that you want to build a long-term partnership. Paint a vision of a mutually profitable future. That vision may make them more amenable to providing a good deal.

Also, remember that no matter how cool and indifferent your SaaS contact may appear, they have targets. And their in-house lawyers are under pressure from their sales team to close those deals. That pressure creates leverage, sometimes substantial leverage. Offering a smooth transaction and speedy signature can count for more than you think. An extreme example of this is a negotiation I recently had where the SaaS provider let it slip that they had internally promised a senior manager that they would be able to recognise the revenue from the deal in the current accounting period. Jackpot! We had a highly motivated vendor – they were desperate to close the deal on time and were willing to make concessions for that reason.

If you focus on a reasonable number of key negotiation points (proportional to deal value) and signal a quick path to signature, you’ll find that even rigid SaaS vendors can bend – at least a little.

It is critical to put in the work up front. Identify what really matters. Explain your reasoning clearly. And when they say “no”, don’t blink. Hold your ground.

If the provider insists their terms are non-negotiable, don’t walk away; play the broken record. Say something like: “We’re happy to enter into an agreement, but these terms need to be amended”. Repeat as needed. I’ve had providers fold on their “non-negotiable” position after having to ask four or five times. There is no cost to asking.

Here you can find more thoughts on how to use the early stages of a deal to position yourself for success: Anchoring: Should I ask for the moon or be reasonable!?

Most importantly, never – ever – signal desperation. Telling your SaaS vendor you’re up against a hard deadline is like handing them a remote control to your panic button. They’ll run down the clock and push you into unfavourable terms – that’s just the standard playbook for those negotiating on behalf of SaaS companies. Of course, you need to manage timelines – but instead of saying “we need this signed by X”, ask them how long their processes take, build in a buffer, and follow up frequently.

Act like an important customer. Own the process. Take the lead – but whatever you do, don’t come across as desperate.