The UCaaS industry is at a pivotal moment as businesses revisit their hybrid work investments, deciding whether to renew, renegotiate, or reinvent their approach. Unified Communications as a Service (UCaaS) has become the backbone of modern operations, making these decisions critical for balancing cost optimization with the need to sustain seamless, essential services. 

Here’s a breakdown of strategies experienced IT managers and SaaS insiders shared with us to help you navigate these negotiations. 

Understanding the UCaaS Landscape

UCaaS providers often approach renewals with specific goals

Upselling – Encouraging customers to move to higher-tier plans or purchase additional licenses. 

Annual Price Increases – Incremental hikes justified by added features or inflation. 

Discount Offers – Incentives for annual payments or bulk licenses benefit providers by improving cash flow and customer retention. 

Recognising these strategies can give you a foundation to craft a counter-approach. In some areas of the UC, and wider IT, market vendors typically factor a 5%-10% discount into their pricing, giving you some room to negotiate without causing the vendor significant financial strain.  

It’s worth noting the ‘skinny margins’ your provider is probably working on. As the UCaaS space becomes more commoditised you may want to focus on value-adds and efficiency gains rather than solely on price. If you can bring in additional services through a partner you are more likely to get favourable terms in a bundled offering too.  

Get Ahead – Preparation is Key

The negotiation process should start well before the renewal date, preferably 6 – 12 months before your service end date.  

Zeus Kerravala, Principal Analyst at ZK Research commented:

“At a most basic level, customers need to understand what they have bought and what they are using. Most companies use multiple UCaaS providers, which is ok as users have different preferences but all of the vendors offer different license tiers.  

“During the pandemic, companies overbought features and doing a consumption audit of what features workers are using and not using can be useful in any renewal discussion to ensure spend is optimized.” 

Assess Current Usage

Gather data on your organisation’s usage. Identify which features or licenses are underutilised, as this can be leveraged to adjust your subscription. 

Usage stats can also highlight the value the software provides, helping justify any cost-saving requests and also helping you to get a better picture of ROI generally. 

Benchmark Pricing

Research industry standards and competitors’ pricing. If a competing UCaaS solution offers similar features for less, it strengthens your negotiating position.  

Understand Budget Constraints

Align with your finance team to understand what discount level or pricing structure fits your organisation’s budget. 

Irwin Lazar, President of Metrigy, commented:

“Microsoft’s unbundling of Teams and recent price hikes should allow customers to at least consider alternative providers and increase their leverage at renewal time. Our data shows about 24% of Microsoft customers will consider alternatives to Teams at renewal time.” 

Building Vendor or Partner Relationships

Strong vendor relationships can be a game-changer in negotiations. As a former SaaS finance head shared, building rapport and showing goodwill can often lead to favourable terms. 

Proactive Communication: Reach out to the vendor or partner months before renewal. This shows that you are invested in the partnership and gives both sides time to discuss options. 

Transparency: Be clear about your organisation’s needs and constraints. Vendors appreciate honesty and are more likely to work with you to find a solution. 

Lean on your partners: If you are buying through an SI or MSP type partner then make them work hard for your renewal. They have more sway with your vendors and often can add great value around the platform to make migrations and adoption easier.  

Zeus continued, “When using multiple vendors, it’s important to understand where features and functions come from – for example, with AI, many vendors rely on third parties, such as Cognigy, it may be more cost effective to unbundle the pricing and buy direct from the third-party creating leverage across multiple products.” 

Negotiation Tactics

When the time comes to negotiate, consider these tactics: 

  • Be Careful with Multi-Year Agreements 

Vendors or partners often prefer the stability of a long-term commitment and may offer discounts in return. However, BE CAREFUL! Being locked into a 5-7 year deal that isn’t favourable can turn into your Achilles Heel. The beauty of UCaaS is the subscription nature, if you don’t like it then moving to a different platform has never been easier.  

  • Highlight Competitors 

Mentioning that you are evaluating alternatives can nudge your provider to sweeten the deal. Be prepared to follow through if necessary. 

  • Leverage Executive Buy-In 

If cost savings are crucial, involve your leadership team. Vendors are more likely to take demands seriously when they come from senior decision-makers. 

  • Consider Value-Added Trade-Offs 

Instead of focusing solely on price cuts, ask for additional value like extended support, training, or access to premium AI features at no extra cost. 

Lazar continued:

“Companies need to figure out how UC fits into their overall AI strategy. While every UC company now has an AI copilot or virtual assistant, some companies are forgoing those to focus on integrating UC data into their company-wide AI platform (e.g. OpenAI, Meta, etc.) This will impact renewal decisions as well as companies determine whether or not they want to bundle AI.” 

What to Expect

Not all negotiations will yield savings. UCaaS providers often operate on tight margins and expect a certain level of price sensitivity. Discounts typically range between 5%-15%, depending on your organisation’s size, license count, and term length. Achieving more significant reductions requires exploring alternative solutions and being prepared to switch providers. 

Optimisation Beyond Renewal 

Negotiating UCaaS renewals is just one piece of the puzzle. You need a long-term strategy that works for your business.  

  • Consolidating Vendors 

Reducing the number of UCaaS tools in use to avoid overlapping functionalities. Consider this in conjunction with your risk tolerance for outages and also your AI adoption goals.  

  • Regular Usage Audits 

Periodically review usage to ensure you aren’t overpaying for unused features or licenses. 

  • Investing in Vendor Management Platforms 

These tools can help track contracts, usage, and renewal dates, streamlining the negotiation process. 

Final Thoughts

A successful UCaaS negotiation hinges on preparation, relationship management, and strategy. By understanding your business needs, leveraging data, and fostering open communication with vendors, service providers and partners, you can strike that tricky balance between cost savings and ROI.  

The emergence of AI across the UC space is also another area in which IT buyers will have to navigate successfully. Understanding the AI roadmap, any price or functionality enhancements also, will be key in negotiating a renewal.  

 



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