Read this Before you Sign Another SaaS Contract

As of January 2022, there are 15,000+ SaaS products on the market in the United States. A small to midsize organization uses a minimum of 15-20+ SaaS (software-as-a-service) tools. That means that as a founder or leader in the organization, you have to select each of these tools, negotiate a contract and implement them in your organization. This is a daunting task. One that many organizations get wrong and drain large amounts of resources trying to correct.

After sitting on the sales floor of SaaS organizations managing  sales operations for a number of years,  I learned a few things that have helped me negotiate great deals for organizations when I’ve been on the other side of the table as a  buyer.

Know Who You Are Talking to

BDR/ Account Executive- This is the sales representative. These individuals typically know the basics of the tool but don’t usually know the technical details. If they tell you that the tool integrates with everything or it can do x or y, take it with a big pinch of salt. Not always, but often, they are trained to tell you what you need to hear to move you on to the next step of the process because that is how they are incentivized.

Depending on their seniority at the organization, BDRs and Account Executives do know a lot about the pricing and have the knowledge on what discounts they can/ cannot give based on what they have done for other customers in the past.

Customer Success Engineer- When the questions you are asking get technical enough, you will typically be invited to a call with their ‘engineer’, ‘implementation engineer’ or ‘customer success engineer’. These are the people that know the details of what integrates with what. If they tell you that something does or doesn’t integrate, listen to them carefully. If they tell you that something is on the ‘roadmap’, be wary. This is the stock answer that is often given for all features that customers request that the tool cannot support. Something may genuinely be on their roadmap, but it may not be scheduled for release for a number of months or years. Make sure the timeline is known, clear and works for you. Never select a tool based on a promise of features the rep tells you will be added later. That is like marrying someone thinking they will change after the wedding.

If the implementation engineer can’t answer your question or meet your needs, move on because this is likely the individual who you will interface with once you make the purchase.

Note: if you are not invited to a call with their engineer, your questions are not detailed enough!

The Devil Is in the Details

The devil is very much in the details. The best and fastest way to uncover the details is to start a free trial of the tool where you pick an actual project or task you’d like to accomplish with that tool and execute it from beginning to end. Many buyers make the mistake of giving the tool a surface level look during their free trial and don’t get to the details until it is too late. Don’t be that person. Yes, this will be more work upfront but I promise you it will save a ton of hassle down the road.

If your free trial has expired, ask your rep for an extension or start a new free trial. If the rep tells you that the features you are looking for are not in the trial version but are available in the ‘pro’ or higher tier product, ask them to upgrade you to that tier so you can verify.

It is your job to do the detailed investigation so you understand exactly which of your problems the tool will and will not address. Sales reps will not volunteer this information for you. There is a big difference between a tool that has a native connector to another tool it needs to integrate with, versus a tool that requires you to write custom code as part of the integration process. If this level of detail is beyond your comfort level, find someone who can represent your interest and understands these technicalities to test drive this tool for you.

Get the Best Price

Some watch-outs when it comes to pricing of SaaS products:

1. Make sure that you are clear on the payment terms. Often the price listed on the website is the monthly price per user if paid annually. It may say $12/per user per month. This means you need to pay 12*12= $144 up front. If you pay monthly, the price is often higher.
2. Factor in the cost of implementation, training and ongoing support. Some tools include a basic implementation while others charge.
3. Check if the tool will auto-renew annually and how much notice you need to give if you want to cancel it.
4. Know that you may get a better deal at the end of the month or quarter depending on how sales quotas are set at the organization. You can ask your rep if they can offer a discount if you agree to close the deal by a certain date.

Make Sure the Timing Is Right

Make sure you have someone in-house who can pick up where the implementation leaves off. A simple point but so important that I think it deserves its own section. So often, tools are bought before it is clear who will own and use them. If your plan is to wait until after you have signed the contract to figure this out, you are sure to waste money!  Be realistic about what your organization is ready for and when.