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For Sourcing & Vendor Management Professionals

The Components Of SaaS Pricing And Negotiation

What Sourcing Professionals Should Know About SaaS Pricing

October 4, 2007

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Authors

  • By Liz Herbert
  • with Christine Ferrusi Ross,
  • Allison Thresher,
  • Francesca Bartolomey

Why Read This Report

Firms often view software-as-a-service (SaaS) as offering simpler pricing than traditional on-premise software because infrastructure, maintenance, and upgrade costs are all included in a pay-as-you-go subscription fee. But firms must be careful not to take too simplistic an approach when evaluating costs and negotiating contracts. Additional charges often apply for support, configuration services, additional functionality, or going beyond a preset storage limit. Firms also often forget to consider what happens at the end of their contract term. In some cases, they are hit with hikes in subscription fees if they decide to stay with their vendor or with hidden charges if they decide to leave.

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