- Bearson Smith
- Reading Time: 4 minutes
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Salesforce is one of the leading CRM platforms in the world. As such, most organizations have purchased their CRM SaaS products and are deeply entrenched with Salesforce in those areas. Many product subscriptions are tied to individual user volumes, and their fees are derived on a monthly unit pricing basis. However, Salesforce has many additional products, like Success Cloud and Commerce Cloud, that do not have such straightforward pricing models and instead follow a more unique Salesforce licensing model. For these products, there are additional pieces to consider when adopting or renewing to ensure that your deal is set up for success throughout the term of the contract.
Here, I will outline products that follow a percentage of net fee structure and products with a metrics-based fee structure as well as some key recommendations to help reduce overall costs if you’re considering these products.
Percent of Net Fee Structure Considerations
Some products derive their fees by taking the “percentage of the net fees” of all other products within the portfolio. A good example of this is Premier/Signature Success. Premier/Signature Success is a support product that organizations purchase to get one-on-one Salesforce support services should there be any issues with products over the term. While there is a base edition that comes with your Salesforce subscriptions, Premier/Signature Success are offered at additional costs, with Signature being the highest level.
In addition to support services, many organizations are beginning to adopt Shield and the a la carte pieces that make up Shield, like Event Monitoring, Field Audit Trail, and Platform Encryption. Adopting these products is also contributing to additional costs in your Salesforce portfolio.
With this fee structure, we have three specific recommendations to keep in mind when considering adoption:
- Ensure you are pushing for the lowest possible percentage applied to a given product. For instance, all-in Shield is priced at 30% of the net spend, but we have seen great success with organizations being able to negotiate this percentage down.
- Secure renewal protections that cover percent of net products. This is quite a hard protection to achieve. We typically see organizations achieve it through a verbal or written (i.e., email) expectation to point to in the future. We have seen many organizations fail to get a renewal protection for these products when they initially adopt. Usually, organizations are able to adopt with a significantly lower net percentage offered for products that fall under this pricing structure, only for Salesforce to come back at renewal and uplift the percentage to list price. As such, this can greatly increase the overall fees that the organization is paying.
- Open up your Salesforce deal and renegotiate all product pricing. We recommend organizations take this step if the adoption is taking place at an inflection point in the relationship between your organization and Salesforce, such as a renewal or significant additional net-new adoption, inclusive of the percentage of net product. This is because each of the individual product fees bubble up to the total that an organization will be paying for products like Success or Shield. If an organization can successfully lower the price of individual products in their Salesforce portfolio, there will be a significant fee reduction effect on the percentage of net products, leading to reduced overall costs.
Metric-Based Fee Structure Considerations
Salesforce also has products like Commerce Cloud or Super Messages where the fees are derived through metric-based licensing. Metric based licensing is where an organization purchases a large chunk of licenses (forecasting usage over the term) and pull down from that commitment over the term. Given the nuances of these types of products, it can be quite difficult to determine the correct commitment for an organization’s needs. This is why we strongly recommend a large amount of due diligence be taken ahead of your negotiations to ensure you’re equipped with the most knowledge possible when speaking with Salesforce about usage based products.
If an organizations finds they did not forecast properly and will run out of the reservation before the term end, Salesforce provides overage rates that can then be drawn down from (typically for an increased cost) in order to fulfill any additional product needs through the end of the term. Given the unique way these products are licensed, we have a few recommendations that we have seen be quite helpful for organizations looking to adopt:
- Ensure that you have done significant due diligence with regard to forecasting needs over the term. We have seen too many organizations not put in enough time for this key initial diligence. Without the proper preparation, this often leads to either unused product (i.e., shelfware / lost fees) or significant overage costs applied. Further, we have seen organizations not fully vet the product and evaluate the value, in fees, they are receiving versus the total cost they are paying for the product.
- Be aware of the overages they may face in term. Ensure that they are negotiating the overage rate upfront as well as negotiating for renewal protections across the price of the product as well as the associated overage rates.
The Bottom Line
Overall, organizations need to be keenly aware of the unique licensing that Salesforce can sneak into a portfolio if the organization is unaware. UpperEdge has significant experience helping organizations negotiate these products as well as ensuring the organization is thinking about all of the key aspects that will result in a best-in-class deal with Salesforce.
If you are interested in developing a holistic Salesforce strategy to help you navigate unique Salesforce licensing models, explore our Salesforce Advisory Services to see how we can help or contact us to chat with our expert advisors about your specific needs.
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About the Author
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