Salesforce sells one of the most expensive solutions on the market, commanding a premium over comparable options. Customers have adviced that in order to achieve the innovative solutions the vendor promotes, you must prepare to pay a hefty fee.
We're not denying that Salesforce is an expensive solution, but that doesn’t mean costs cannot be reduced. In this document, we'll dive into competitive discounting for Salesforce products and offer advice to mitigate pricing related risk.
Price Statistics - How does Salesforce Compare?
Premium Over Closest Competitor
Microsoft Dynamics and SAP are the closest competitors to Salesforce in the CRM space. Salesforce is priced more than double the cost of Microsoft Dynamics on a per license basis when comparing list price. Despite the cost premium, Salesforce still dominates the CRM market.
For similar volumes levels of the same products, Software-Advisory has seen pricing vary from Salesforce with a multiplier of an 11x difference. The variance disproves the widely accepted notion that discount is dictated by size of deal or number of licenses purchased.
Gross Margin Per License Sold
There are minimal costs associated with licensing additional users. As a result, software vendors can achieve very high gross margins on the products sold. The amount of profit that is made on every license sale provides flexibility for software vendors to offer aggressive discounts while still maintaining positive net incomes.
Discount Percentages - Know Salesforce’s Discount Ranges
General Discount Range
Like those of many other software vendors, Salesforce’s pricing strategy is focused on capturing as much value in a transaction as possible. So, depending on your leverage in a negotiation, you may get a completely different discount for the same size purchase as one of your peers.
Highlighted in the table below are the average discount ranges we observe for each of Salesforce’s main product sets, aggregated over hundreds of client deals in 2019. Eighty percent (80%) of observed deals fall within these discount ranges. Understanding what deems a price “competitive” is dependent on the context and leverage in your deal. We’ve seen many clients achieve higher discounting with a well thought-out strategy and leverage plan to combat Salesforce’s tactics.
Wrap Up: Don’t Buy Premium Products at Premium Rates
To increase your chances of achieving higher discounting and reducing costs, leverage sales rep incentives to facilitate movement on the bottom line.
If you fall outside of the average discount ranges, review some of the other Software-Advisory resources listed below to help plan your strategy and mitigate risk.
Be sure to check out other valuable Salesforce Alternatives that fit your business models.
Get in touch with us to narrow down your software options.