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How to work with benchmark prices Print
Modified on: Mon, 15 Jan, 2024 at 11:21 AM
How does Sastrify collect price benchmarks?
Sastrify collects benchmarks from a number of sources, including:
- First-hand experience from vendor negotiations that Sastrify supports as lead negotiator.
- Conducting comprehensive market research, price comparison analysis, and data aggregation from multiple, reputable industry sources.
- Screening of vendor pricing webpages to spot special deals or price increases.
A benchmark provided by Sastrify represents a combination of the above sources. When requesting a benchmark, we strive to select a sample of price points that are comparable to your current contract conditions in terms of volume (e.g. number of licenses +/- a certain range), contract size, contract length and any other major cost driver.
For further clarification, please reach out to our CSM or IT Buyer.
How can I use a Benchmark in my next negotiation?
A price benchmark is a powerful tool in a negotiation, as it can help shift negotiation power to your advantage. Knowing if a good price for your contract size and volume can get a 20% or a 50% discount can make a significant difference.
However, there is no guarantee of success attached to a benchmark. Other factors that also have a significant influence on the final price, including:
- Your contract history with a vendor.
- Your volume forecast for the next renewal or the initial quote.
- Your sales rep and their own sales target.
- Timing of your negotiation (vendors tend to offer higher discounts towards the end of their fiscal year).
- Other typical negotiation powers like urgency, transparency, availability of alternatives, etc.
In any case, knowing a benchmark that is better than your current quote can always serve as an internal goal-setting for your negotiation or as a door-opener to convince vendors to make additional commitments.
Important: dare to challenge the benchmark! As outlined above, it's a collection of historic price points based on a certain sample size. At Sastrify, our Procurement Specialists regularly beat benchmarks and create new best-in-class price points and we encourage you to do the same. It is not uncommon for vendors to undercut a price point after being confronted with a benchmark or a budget constraint.
Note: As market conditions for SaaS vendors have changed in 2022-2024, Sastrify has observed more frequently that some vendors show tendency to provide higher discounts than in the past to increase the likelihood of closing deals. This is just another reason to challenge historic benchmarks.
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