Unlocking the Value: Assessing the Quality of Your Discount
In the realm of modern business, enterprise agreements with vendors have become a staple for many companies. These agreements promise locked-in pricing discounts and a sense of exclusivity, making organizations feel valued and secure in their partnerships. It's certainly a reassuring feeling to believe you're getting a great deal on valuable technologies.
However, beneath the surface lies a stark reality: vendors often hold significant leverage in these agreements. While the discounts may seem enticing, are they truly the best deal available? Do any organizations ever pay List Price? Probably not! Are the substantial discounts they're offering genuine, or is the List Price inflated to create the illusion of a significant discount percentage, leading customers to perceive it as a 'good deal'?
Behind closed doors, tech vendors often employ a 'top-down' approach, prioritizing deal closure above all else. While individual sales representatives may genuinely want the best for their clients, they are ultimately bound by organizational pressures and objectives. The urgency conveyed to customers to expedite decisions may not always align with their best interests.
The rush to secure signatures and approvals can lead to hasty decisions that may not benefit the customer in the long run. Threats of losing discounts or resources if delays occur are common, but often exaggerated to drive urgency. Urgency is one of the biggest reasons organizations lose leverage and overpay for technology solutions.
Overpaying on the initial purchase costs organization millions of dollars in perpetuity.
And what happens at the end of your initial term? Did the vendor initially use aggressive tactics to gain entry, persuade you to integrate their solution deeply into your ecosystem, knowing it would be challenging to remove, and then significantly hike up your annual costs at renewal time? Are they telling you that they need to get you “up to market value” to justify the increases since you “got such a great deal initially”?
At Gray Wolf Financial, we've analyzed countless enterprise agreements and found that a significant portion—up to 75%—are overpriced. Outside of enterprise agreements, we also found that 90% of SaaS buyers are overpaying. Infosys published an article stating that businesses have $300B in unused cloud commitments. These revelations underscore the importance of seeking expert guidance when navigating vendor agreements. Our team previously held key positions at the largest IT vendors and are now on the other side of the table helping organizations outsmart the hunt to get the best deals.