In order to negotiate effectively for better terms, emphasize removing the auto-renewal language in the contract. This is useful because having an auto-renewal can limit leverage for negotiation and flexibility in future terms. Highlight that your finance team has mandated this change for all new and renewed contracts to alleviate any potential issues down the line.
Stress the need to eliminate any proposed uplift in the pricing as part of the renewal negotiation. Anchor your argument on historical pricing levels and any underutilization from the previous term. This could help in pushing the supplier to agree to stable pricing for the new term, especially if volume has not increased significantly.
Discuss the possibility of waiving any overage fees associated with the service, especially if usage has been predictable or lower than anticipated. Propose that as part of the negotiation for the renewal, all overages should be waived to make budgeting much clearer. This can be leveraged more strongly if there are compliance issues or if the renewal has significantly fewer users or scopes.
Negotiate for more favorable payment terms as part of your renewal. Highlight how structured payment plans like annual upfront payments can help create a stronger relationship. Additionally, you can ask for modified payment plans which can benefit your cash flow while ensuring that the vendor receives payments sooner.
If you're in a position to commit to a longer-term agreement, leverage this as a point of negotiation to secure better terms or lower pricing. Highlight that your company typically only assigns multi-year contracts if substantial discounts are provided. Ensure that this commitment aligns with the confidence in the product and performance of the supplier.
Use the fact that you are evaluating competitors as leverage in the negotiation process. If there are alternative options that fit your requirements better or are priced lower, present this information to the supplier to push for better terms. Make sure to communicate the urgency tied to your internal budget decisions that necessitate the change.