One big Saas-hole

What you can do about it

Tom Mills
April 29, 2025

Vendors love silent auto-renewals, often with built-in price hikes. You know how much I despise these
Negotiate for:
- A minimum 60-90 day written renewal notice.
- The right to opt out or renegotiate at renewal.
- Removal of any automatic renewal clause altogether if possible. Yes, I have been known to issue a termination the same day as a contract arrives if a vendor insists on keeping the auto-renewal in there.
Why it matters: Prevents lock-in at inflated rates and gives you leverage at renewal time.

Vendors typically bake in annual price increases (5-10% standard). Why though? Once implemented, technically the cost of Saas to the vendor should go down each year? The cost to serve decreases after all.
Negotiate for:
- Fixed pricing over the contract term (especially for 2–3-year deals).
- A cap on any annual uplifts (pegged to CPI which is at least a fair metric).
- Discounts for multi-year commitments or upfront payments.
Why it matters: Keeps your long-term costs predictable and avoids budget surprises.

SaaS pricing often hinges on user seats, transactions, storage, or API calls. I think this is the biggest cash cow for most vendors.
Negotiate for:
- Clear, unambiguous definitions of billable units.
- Grace thresholds or tolerance limits before additional fees kick in. This is only fair.
- Favourable true-up terms (e.g., annual reconciliation vs. monthly). I did this with brilliant effect in my last business. Yes there’s extra admin work in reconciliation but so much money to be saved.
Why it matters: Stops vendors from penalising you for ambiguous or inflated usage.

Many vendors retain too much control over your data.
Negotiate for:
- Explicit statement that your organization owns its data.
- The right to export data any time, in a usable format.
- Data destruction and sanitization confirmation after termination.
Why it matters: Protects your IP and ensures business continuity in vendor exits. Don’t forget as well as confidentiality, there is huge intrinsic value in data. It’s yours, you should own.

SaaS contracts often lock you in for fixed terms with no exit flexibility. The great vendor lock in is something I’ll be writing about soon.
Negotiate for:
- A termination-for-convenience clause with a 30–90 day notice.
- Pro-rata refunds for prepaid but unused services.
Why it matters: Gives you agility to pivot if business priorities change. Why should Saas be treated differently to anything else?

Growth or downsizing should be frictionless. Why is it every Saas contract I see though seems to punish you for going either way? Growth is a natural part of business.
Negotiate for:
- Flexible license adjustments without penalties.
- No minimum user thresholds or excessive step-ups.
- Prorated pricing for partial terms.
Why it matters: Keeps your SaaS spend aligned with actual business needs, particularly important today in such a volatile environment.

Leaving a vendor can get messy without upfront terms. It’s not dissimilar to the vendor lock in topic I’ve mentioned.
Negotiate for:
- Vendor obligation to assist in data migration (at reasonable rates).
- Continued access to data for a set period post-termination (e.g., 90 days).
- Clear documentation handover obligations.
Why it matters: Ensures a clean, controlled exit and mitigates vendor lock-in.

Vendors may offer better pricing to other customers. This often happens as a result of size or after they’ve onboarded a few early adopters.
Negotiate for:
- The right to benchmark pricing against market standards annually.
- MFN clauses ensuring you receive terms no less favourable than any other comparable client. This was huge at a break point I negotiated within a contract for our network provider in a previous business and actually gave us the option to move if the MFN clause proved our pricing was no longer competitive.
Why it matters: Keeps your rates competitive and fair over time.

Has this helped?

What have I missed?

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