Whether you’re pondering a new purchase or have a renewal on the horizon, there are changes to LinkedIn Sales Navigator pricing that you should be aware of. For the uninitiated, Microsoft acquired LinkedIn several years ago – but that doesn’t mean Sales Navigator is a standard part of Microsoft’s Enterprise Agreement. To the contrary, actually.

While we have seen a few instances where some version of Sales Navigator is included in a Microsoft EA, NPI almost always sees standalone offers from LinkedIn as we’re helping clients optimize IT purchase costs.

LinkedIn Sales Navigator pricing can be challenging to evaluate. Only entry-level edition pricing is published and that typically applies only to small quantities. LinkedIn doesn’t publish the price of its most robust edition (formerly Enterprise) which is the option that most sizable enterprises are interested in. In addition, our experience is that LinkedIn sales representatives have the flexibility to get creative with any list (or Standard) pricing reflected on quotes.

Multiple Increases, Changes to LinkedIn Sales Navigator Pricing Keeps Customers on Their Toes

For the list pricing that is published, LinkedIn has been increasing it rather consistently. The standard (i.e., what’s published on their website) price for a yearlong prepaid subscription of Sales Navigator Teams has gone from $1,200 to $1,240 to $1,300 over the last few years, the most recent occurring in November 2021. In February of 2022, the pricing page was updated to reflect new editions for Sales Navigator, and yet another price increase.

• Professional Edition was replaced with Core Edition. Pricing went from $780 to $960 per year.
• Sales Navigator Teams was replaced with Advanced. Standard pricing went from $1,300 (it had been $1,240 as recently as April 2021) to $1,500.
• Enterprise was replaced with Advanced Plus. According to NPI’s price benchmark data, pricing had been ~$1,600 at the lowest quantity. While LinkedIn doesn’t publish standard pricing for Advanced Plus, and NPI hasn’t encountered it yet in a client offer, we expect it to be $1,800+.

LinkedIn is not known to be a generous discounter, but it does have tiers and exhibit some flexibility. To ensure you’re receiving the best possible discount, you should push for SKU transparency on quotes and list pricing. Additionally, LinkedIn will often offer discounts for multi-year commitments. A word of caution, however – make sure your discount is being applied to the right SKU. A discount is only effective when it’s being applied to the right subscription at the right volume tier.

Negotiation Leverage and Pitfalls for Your Next LinkedIn Sales Navigator Purchase

Customers should leverage current pricing during negotiations as a means to counter the vendor’s recent price increases. If there’s sizable growth, consider broaching an early extension. But be ready for LinkedIn to swap in the new editions in the years being added.

We expect LinkedIn to leverage its price increases to make the case that customers should consider an ELA offering, such as its SSEP (Sales Solution Enterprise Program). In this case, LinkedIn will push for higher subscription commitments, but will offer more sizable discounts compared to a traditional renewal often through the inclusion of quantity buffers and other deal “sweeteners.”

You should also evaluate new features as part of your negotiation prep. The new editions align closely with their predecessors, but they’re not exact. Dropping from Enterprise to Advanced, or ensuring you move from Teams to Advanced (and not Advanced Plus), are two scenarios where rationalization between old and new editions translate into material cost savings.

If you’re looking for objective pricing and negotiation intel for an upcoming LinkedIn Sales Navigator purchase or renewal, NPI can help. Contact us to learn more.

Late last year, Microsoft “rebranded” its Workplace Analytics product. The new product name is Microsoft Viva Insights and it aims to pick up where Workplace Analytics left off – or, depending on how you look at it, fell down. One obvious change is the pricing. There was a price reduction of about 43% with the introduction of Viva Insights.

In addition to the rebranding, Microsoft has somewhat changed the messaging around the product. Workplace Analytics was previously promoted as a tool that “provides rich, actionable insights into your organization’s communication and collaboration trends to help you make more effective business decisions.” Viva Insights is promoted slightly differently as a tool that “shows you personalized recommendations that help you do your best work. Get insights for building better work habits, such as following through on commitments made to collaborators and protecting focus time in the day for uninterrupted, individual work.”

The nuances in messaging speak a lot to the backlash Microsoft received around the privacy controls with Workplace Analytics. In both cases, the product derives insights by summarizing your Microsoft 365 data – data that you already have access to – emails, meetings, calls, and chats. But Workplace Analytics was promoted as a tool to help the organization manage organizational productivity. Viva Insights, on the other hand, leads more with personalized recommendations. The insights for individuals that Viva Insights presents are completely personal and private. Personal insights in the app are for your eyes only; neither your manager nor the system administration can see your insights. But while the details are seen only by the individual, there IS some aggregated information that is provided to managers.

Microsoft Viva Insights and Organizational vs. Individual Productivity

Improving individual productivity is still a goal rooted in organizational effectiveness, and there is still an organization layer of value that Viva Insights customers seek. So – privacy concerns aside – managers still have a need to assess worker productivity. That begs an important question: What type of, well, insight does your manager receive when using Viva Insights?

Microsoft states, “The product shows managers insights about how their teams’ work patterns might lead to burnout and stress. These can be caused by regular after-hours work, meeting overload, or too little focus time.”

A softer version of the goals of Viva Insights might be that managers can discover key insights about their team’s collaboration effectiveness and employee experience. In any event, there’s a Manager dashboard that provides insight into the employee experience. Here’s a screen capture:

It does seem that Microsoft is working hard to adapt Viva Insights for the modern workplace, tuning it to be as helpful as possible to individuals and to managers. They have gone so far as to remove features that privacy advocates decried as a little too Orwellian. In December 2021, Microsoft removed the “Productivity Score” feature that identified individual end-users, clarifying that the scores measure organizational adoption of technology.

Workforce analytics is important as both individuals and business leaders strive to understand current practices and how to improve efficiencies. In an ideal world, going beyond the question of “who is doing what” and understanding how your employees are completing their tasks – who they are collaborating with, what tools they are using to make them successful at their job, and what’s slowing them down are key metrics to increasing productivity (and job satisfaction).

Grand Plans for Viva Means Leverage Opportunity for Customers

It appears that Microsoft has grand plans for the Viva employee experience platform, and Microsoft Viva Insights is just one part of that vision. In addition to Insights, Microsoft currently offers other components of the platform including:

• Viva Learning – a centralized learning hub in Microsoft Teams that lets you seamlessly integrate learning and building skills into your day
• Viva Topics – uses AI to automatically search for and identify topics in your organization
• Viva Connections – a gateway to employee experiences, with the ability for you to curate the content and tools you want to deliver through quick access to data and tasks, relevant news, communications, people, and resources.

Microsoft, of course, offers these in a bundled suite offering (because we all know how much Microsoft loves a bundle!). The suite includes a bundled discount of approximately 12% over the individual components. Microsoft has also noted that the Ally.io acquisition will be rolled into the Viva Suite.

As Microsoft’s customers consider investing in new employee experience tools, Viva Insights and the Viva Platform will be a natural contender given its integration (Microsoft-side leverage). And Microsoft is highly motivated to gain traction in this area (customer-side leverage). Customers should make sure they’re paying the best possible price, right-sizing their purchase according to actual usage requirements, and negotiating maximum product/contractual flexibility to accommodate changes in the organization’s requirements. Laying that foundation now is essential to avoiding cost bloat in the future across your Microsoft estate.

Late last December, as most folks settled into the holidays and a slow business news cycle, Oracle spiced things up. It announced the acquisition of medical-records systems provider Cerner Corp. for $28.3 billion. An Oracle Cerner acquisition was – and is – big news that deserves revisiting.

Cerner is among the top EHR vendors in the world, competing with market leader Epic Systems, Allscripts and a handful of others. Cerner has its own history of strategic acquisitions, most notably its 2014 purchase of rival Siemens AG Healthcare for $1.3 billion. That acquisition was intended to help Cerner better compete with then-emerging Epic Systems.

In recent years, however, Cerner has been losing market share, falling 20% in 2017 to 16.6% in 2021. Meanwhile, the market leader, Epic Systems, has overtaken Cerner as its market share grew from 19.5% in 2017 to 23.6% in 2021.

So Why Did Oracle Acquire Cerner?

The acquisition of Cerner is intended to help Oracle boost its presence in electronic healthcare delivery by bringing a vast amount of health data to its cloud services that will support gaining more ground in cloud computing. To date, Oracle has been a very small player in the healthcare space behind the market leaders Amazon and Microsoft.

But, like many industries, the healthcare sector has experienced accelerated digital transformation in the last two years. Unprecedented pressure on healthcare systems has also exposed critical weaknesses and challenges in how the healthcare industry responds to spikes in demand – for care as well as for more seamless collaboration across providers, patients, researchers and the rest of the healthcare delivery ecosystem.

Oracle says its goal is to deliver “zero unplanned downtime in the medical environment and to capture opportunities to expand cloud, AI and machine learning applications for Cerner’s healthcare clients.” Oracle states that a major goal will be to use data as a diagnostic tool to help doctors and nurses improve patient care.

Cerner’s goal is to accelerate their work, modernizing Cerner’s EHR to improve the caregiver experience and enable a more connected, higher quality and efficient patient care system. Oracle’s focus on usability and voice-enabled user interfaces will help to reduce the amount of time that medical providers spend dealing with health IT systems and increase the time they spend on patient care delivery.

The Oracle Cerner acquisition also gives the combined entity leverage as it tries to displace Epic. David Lareau, CEO of Medicomp Systems, recently penned a great perspective over at Forbes. Here’s an excerpt:

Epic currently holds the top position in enterprise solutions for healthcare delivery systems and is the “safe choice” of CIOs — much in the same way that IBM was the safe choice in the mainframe era of computing. Ultimately, IBM’s dominance was first challenged by the advent of the minicomputer and then the PC. Today, with the Cerner acquisition, Oracle has an opportunity to challenge Epic in the new world of cloud-based systems that deliver usable clinical data insights at the point of need.

Epic’s dominance was built in an era when electronic health record (EHR) systems were focused on processing transactions to support billing and reimbursement in the world of fee-for-service care. The transition to value-based (or outcomes-based) care will require the delivery of data-driven clinical insights to providers across the entire continuum of care. On paper, Oracle’s expertise in database technology, combined with Cerner’s experience in healthcare systems, provides the raw materials for a new approach. This transformation, however, is not without risk.

In short, if Oracle sees its mission through, it could not only become a more formidable competitor to Epic, it could redefine the role and value of EHR solutions altogether. Instead of merely transforming billing and transaction processing, Oracle’s version of Cerner could transform the way clinical data is acquired, monitored, shared and integrated across all clinical workflows and all points of patient care. And, to Oracle, that’s worth something – $28.3B, in fact, which is the vendor’s largest-ever acquisition.

What Does an Oracle Cerner Acquisition Mean for Cerner Customers?

While Oracle’s acquisition is not yet complete (its tender offer has been extended until March 16, 2022), there are some considerations and concerns Cerner customers should take into account – particularly if they are renewing or negotiating with Cerner anytime soon.

NPI sees several challenges resulting from this acquisition:

• Many Cerner customers already utilize Oracle products in corporate datacenters, but Oracle may find it challenging to get them to move to the more modern cloud-based applications based on the promise of more tailored healthcare offerings in the upcoming years. On the flipside, this is where an Oracle-owned Cerner is going and customers should prepare (and maximize negotiation leverage) accordingly.
• Such an aggressive extension into the healthcare sector will necessitate that Oracle make significant investments in cybersecurity. Kronos’s recent ransomware attack is causing some organizations to put a pause on cloud migrations, so Oracle will need to demonstrate the highest measures of security for sensitive healthcare data. Cerner customers will need to keep an inquisitive eye on Oracle’s security posturing.
• There are Cerner solutions that currently sit on AWS. These will still need to be supported until contractual obligations expire.
• Although Cerner’s core product, Millennium, is built on Oracle’s database, it could still take years to migrate it to the cloud.

It is NPI’s understanding that Cerner will continue as a stand-alone division within Oracle. This is important because Oracle’s depth of experience in healthcare isn’t as strong as some of its competitors, and it will need to rely on Cerner personnel to make things work.

As for pricing, it’s too early to tell how the acquisition will affect Cerner pricing. NPI will be monitoring this closely and will keep our customers up to date on any developments that may impact their Oracle and Cerner spend in both the short- and long-term. Meanwhile, it’s important for Cerner customers to perform IT price benchmark analysison all Cerner purchases and renewals to ensure they’re paying (and locking in) the lowest possible price.

Have questions about how Oracle’s acquisition of Cerner may impact your Cerner purchases? Let’s talk.

Before smartphones and text were a thing, there were pagers – a cute little box that sent alphanumeric message alerts. While pagers are (for the most part) an outdated artifact, PagerDuty has added panache and modernization to the concept. It provides a SaaS incident response platform for IT departments that has attracted customers like SAP, Zoom, Yelp and others. As its popularity has grown, PagerDuty pricing has taken some twists and turns.

PagerDuty changed their product set early in 2019. Historically, it offered Lite, Basic, Standard and Enterprise classes of service. These tiers changed again in mid-2020 to Starter, Platform Team, Platform Business and Enterprise. And the latest iteration is Free, Professional, Business and Digital Operations.

That’s a lot of changes. It’s no wonder many PagerDuty customers – especially those approaching a renewal – are wondering what they’re paying for and if it’s a fair price.

PagerDuty Pricing Changes – The Highlights

Here are a few highlights on how PagerDuty pricing tiers have changed and how they correspond to the vendor’s current tiers:

• PagerDuty has introduced a new, Free tier
• The Enterprise tier is now called Digital Operations. NPI’s experience suggests pricing for Digital Operations to be the same as it was for Enterprise ($99 per user/month)
• Pricing for Business is the same as it was for Platform Business ($39 per user/month)
• Pricing for Professional (on par with the old Platform Team tier) is actually lower – from $29 to $19 per user/month

More info is in the screen captures below.

Current Pricing Tiers (found here):

Other Considerations When Negotiating PagerDuty Pricing

If you’re renewing or negotiating with PagerDuty, pay attention to support. As PagerDuty has moved to a SaaS solution, there is inconsistency in how the support costs are handled.

Changes to the vendor’s sales leadership are also something to take note of. The most recent information coming out of PagerDuty is that the sales team is being built out with ex-Salesforce folks. The CRO and head of sales both come from Salesforce and that’s resulted in a lot of new sales team members with a Salesforce pedigree.

Not surprisingly, we are starting to see sales and negotiation behaviors that look and feel a lot like Salesforce. Where PagerDuty pricing was once rigid and largely unchanging, we have seen PagerDuty sharpen the pencil and offer more aggressive pricing, especially on larger deals. There is intense pressure to grow business and sales reps risk losing accounts if they do not grow annual revenue.

NPI continues to analyze many PagerDuty purchases and renewals for our clients. Many have been using PagerDuty for a while and some of the older pricing has been grandfathered in. If you’re one of them, we suggest taking a fresh look at pricing and going back to the negotiation table to make sure your pricing matches the vendor’s new, aggressive style.

Wondering if you’re getting the best possible price for your PagerDuty purchase or renewal? Let us know – NPI can help.

Disruption defined much of 2021 for Cisco and its customers. But that didn’t put a dent in demand for the vendor’s offerings. According to Cisco CEO Chuck Robbins:

In Q4, we saw double-digit revenue growth in campus switching, Catalyst 9000, high-end routing, wireless, and in our Zero Trust solutions, along with strength in our security endpoint portfolio. We also had a very strong adoption of our Acacia optical solutions.

However, any excitement around growth and innovation across Cisco’s offerings has been tempered by persistent supply chain issues. The entire tech industry, Cisco included, feels the strain of semiconductor shortages. Network World wrote that Robbins expects “the supply challenges and cost impacts to continue through at least the first half of the company’s fiscal year and potentially into the second half.”

For Cisco customers, these challenges have resulted in multiple price increases that will impact every customer in 2022.

A Quick Note on the Semiconductor Shortage and Other Supply Chain Issues

Before we dig into the latest Cisco price increase, let’s take a look behind the scenes. The COVID-19 virus has impacted the supply chain, resulting in serious ramifications for the tech industry. Increased demand for hardware components partially stemmed from the massive shift to a remote workforce at the start of the pandemic. At the same time, processor plants shut down, labor shortages became an ongoing challenge, and shipping delays became widespread. These challenges continue today.

Arista stated that semiconductor lead times have extended to 40-60 weeks, about double that of pre-pandemic norms. Arista’s COO and senior vice president said:

Things are very constrained, but I think what’s happened is the world supply chain never planned for this big mismatch in supply and demand. And as a result, when you run into a crunch, people try to book ahead and plan to rebuild buffers and so on. But this is not an industry where you can react in one quarter. This will last a long time.

The January 2022 Cisco Price Increase

In early January 2022, Cisco announced a material across-the-board base price increase, effective January 30, 2022. In partner communications, Cisco claimed the hike will be an “average” of 10% across its entire portfolio. Certain products will fall above or below this average, while others – including SaaS – will be exempt.

However, specific price changes published on Cisco’s website tell a different story. They show the increase is significantly higher for most offerings, falling into the 15 to 25% range. While Cisco’s standard 30-day price protection applies to all quotes approved prior to the effective date, the timing of the announcement gave enterprises little runway to adjust their purchasing strategy.

The most recent price increase is not the only price change Cisco users have experienced. Recently, the vendor announced a number of price changes in 2021. For example, in April 2021, Cisco implemented a price increase on technical services for certain end-of-sale products and networking software tiered subscription licenses. In July 2021, price changes occurred for select end-of-sale products, perpetual unified communications licenses, catalyst switches, and security third-party Radware OEM licenses. In November 2021,Cisco increased pricing for select end-of-sale products, ISE passive identity connectors, and catalyst 3850-24U-L-switch-24 ports.

How to Offset the Impact of Cisco Price Increases

1. Perform Price Benchmark Analysis on All Subsequent Purchases and Renewals

Performing price benchmark analysis on all Cisco purchases is critical. It will ensure pricing is within fair market value range, uncover negotiation leverage and identify savings opportunities that can offset higher base pricing. For NPI customers, this tactic typically yields savings of 10 to 20% (or more), which can significantly mitigate or fully negate price increases.

2. Consider the Pros and Cons of the Cisco Enterprise Agreement

If you have a Cisco Enterprise Agreement, now is a good time to evaluate if it still makes sense for your organization. There are certain benefits and disadvantages to the Cisco EA. For certain customers, major shifts in pricing may make the agreement no longer advantageous.

3. Optimize Your Enterprise Agreement

If a Cisco EA makes sense for your organization, optimize your agreement. As is the case with most EAs, overbuying is a risk. Cisco bundles its offerings with little insight into line-item pricing, making it easy for enterprise customers to purchase more than they need. Over-purchasing results in accrued shelfware, ultimately driving up support costs. As prices increase, overspending must be eliminated. 

Customers should adhere to three best practices when signing a net-new EA or renewing an agreement:

• Demand line-item pricing transparency
• Benchmark pricing against similarly scoped peer purchases
• Negotiate smaller bundles that best fit their requirements

NPI Can Reduce Your Cisco Spend

Considering Cisco’s latest price increase, enterprise customers have three options. They can accept Cisco’s price increase without a fight, which is not advisable. Or they can switch vendors – a tactic that’s virtually impossible for most customers given Cisco’s expansive footprint within most organizations.

Alternately, they can take steps to mitigate the price increase and identify savings opportunities across their Cisco estate. NPI is helping customers make this happen through our proven IT price benchmark analysis, transaction-specific negotiation guidance, EA optimization services. We are not a reseller and our guidance is 100% objective. If you’d like to explore how you can reduce the cost of your Cisco purchases/renewals, reach out to us.

Despite customers demanding easier ways to engage and source with software providers, there are some vendors that are holding the line on the status quo. Complexity continues to rule the day for many software sourcing transactions, and the Workday renewal is an excellent example of this.

Years ago, when NPI began seeing Workday renewals and new purchases on a regular basis, transactions were relatively easy to evaluate. Initial purchases were typically driven by RFPs and healthy competition was involved. The number of SKUs in any given transaction was manageable – 10 on the high end, but typically fewer. Workday’s pricing for these deals was typically flat during the term and the vendor was eager to win the business.

Since then, Workday renewals have become more complicated. There are more moving parts per deal as the number of SKUs expand within and across the HR and finance silos. More moving parts mean more complexity and that has paved the way for Workday to find new and unique ways to extract revenue from its customers.

Why It’s Harder to Determine if You’re Getting a Fair Deal on Your Workday Renewal

Increasingly, NPI is seeing bundled pricing at renewal time, making it more challenging to assess the competitiveness of an as-is renewal versus a renewal involving new SKUs. Workday is offering plenty of incentives to adopt its ever-expanding service portfolio, which is good for customers that need these services as the deal window will likely be open.

The vendor is also clearly experimenting with pricing and what the market will bear as NPI has observed a widening range of pricing for similarly scoped deals.

Aside from bundling, there can be some tricky math with how Workday calculates and chooses to show your renewal increases. This is particularly true if you had growth during the expiring term and are expecting more growth during the upcoming term.

Negotiation Opportunities for Workday Renewals

Below are some observations and suggestions for optimizing the outcome of your Workday renewal negotiations:

Demand pricing transparency and granularity. It’s always a red flag when a vendor packages its renewal offer into a slide presentation. Workday customers looking to commit 7 to 8-figure spend should not accept a PowerPoint-style offer where the details are not being shown. Line-item pricing is a must.

Price increases tied to the Consumer Price Index will be tricky this year. Historically, NPI has seen a CPI of 1.2 percent used for renewal-based price increases. But there are clear indications this year will be different as the CPI spikes. The impact on renewals could be material but could also lead to some potential negotiation opportunities.

Familiarize yourself with Workday’s Innovation Index. For customers working on their first renewal, or even their second, you will see a new pricing approach where your annual spend will be increasing each year based on Workday’s Innovation Index. This adds an additional wrinkle to both the annual contract value and the Expansion Table governing future growth. NPI is observing some gotchas that didn’t exist in the past (contact us to learn more).

Acquisitions are making pricing for some SKUs harder to negotiate. Some SKUs are being reconstituted such as Talent Optimization, which had its origins in the Core HCM SKU, and Workforce Planning that came from Workday’s Adaptive Insights acquisition. Strategic Sourcing originates from the vendor’s ScoutRFP acquisition, where some clients may have separately purchased this pre-acquisition. As Workday fully absorbs these offerings into its portfolio (and others), changes to pricing and SKU make-up should be expected and a fresh analysis of if pricing is within fair market value territory should be conducted.

Material changes in headcount can lead to savings or overspending, depending on how your approach your renewal. Significant contraction or expansion of headcount (“FSE” in Workday’s taxonomy) add difficulty to assessing the competitiveness of your renewal. NPI has observed much variability in terms of customer treatment. This is one more reason why your next Workday renewal process should include price benchmark analysis. It’s the surest way to determine if pricing and terms for your calibrated renewal are best-in-class.

Know Workday’s motivations and see how they align with your current and future-state requirements. New SKUs including Journeys, Help and Extend represent areas where Workday is highly motivated to drive adoption. For customers that need this functionality, there are deal windows to be had. For those that don’t, beware – Workday will be pushing these offerings hard and what may seem like a good deal now could lead to underutilized “shelf-ware” and toxic spend down the road.

If you have a Workday renewal on the horizon, NPI can help you identify opportunity for material savings. We are not a reseller and our guidance is 100 percent objective. Reach out to us to learn more.

Overpaying for enterprise software, cloud infrastructure, hardware and IT services is all too common. Unfortunately, inconsistencies in market pricing can make it difficult for buyers to determine whether a vendor’s pricing is within fair market value range.

Below, we dive into the importance of assessing fair market value pricing for enterprise IT purchases, as well as a few tips to consider before your next transaction.

Why Does Fair Market Value (FMV) Matter for Enterprise IT?

Fair market value (FMV) is commonly referenced in many industries, including IT. Essentially, FMV outlines the “fair” price for something in a market.

The Code of Federal Regulations defines FMV in this manner: “fair market value is the price at which [property changes] hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.”

In an article we published a while ago on the importance of FMV, we dug into this definition as it relates to enterprise IT. First, consider the bit on “neither being under any compulsion to buy or to sell.” Let’s be realistic and acknowledge this is rarely the case. In IT, the compulsion to buy or to sell shapes everything in a new purchase or renewal. In some cases, the compulsion to buy is often stronger than the compulsion to sell – which gives the vendor leverage. At other times, the compulsion for sales reps to meet their quotas shifts leverage back towards the buyer. In either scenario, however, a range for fair market value pricing exists, and buyers should aim for pricing that is at least within that range (ideally, better!).

Next, consider a “reasonable knowledge of relevant facts.” As pricing for most enterprise IT purchases tends to be wildly inconsistent, buyers are often at a disadvantage. Why? The most important “relevant fact” – what constitutes a fair price – is difficult to discern when a vendor routinely charges one customer 20 or 50 percent more than the next customer for the same solution.

This is why it’s critical for IT buyers to perform price benchmark analysis on all material IT purchases and renewals to determine if deal pricing is consistent with what their peers are paying for similarly-scoped solutions.

5 IT Benchmarking Metrics to Help You Determine Fair Market Value

How can you prevent overpayment for enterprise IT? There are lots of ways – from negotiating a strong enterprise agreement to software license optimization – but one of the most powerful tactics is IT price benchmark analysis. This will help you determine if vendor pricing is within FMV range and, if not, where opportunities for more favorable pricing exist.

Several factors – we’ll call them metrics – should be analyzed as part of this process. Here are five of the most important:

1. What is a fair price for your solution requirements, regardless of vendor?

Think of this one as a competitive pricing analysis. This is the acceptable cost range for any solution in the market that meets your requirements. Let’s say you’re purchasing a HCM solution for the first time. Based on your unique requirements, what’s a competitive price? Note: this is typically assessed earlier in the vendor selection process, usually before shortlisting.

2. What is a fair price based on what your vendor is charging your peers for a similarly scoped solution?

As mentioned earlier, it’s not uncommon for a vendor to charge one customer substantially more (or less) for a similar solution. Having visibility into these disparities is key in determining FMV for your transaction. The challenge? Most buyers don’t have access to external pricing data. This is why it makes sense to work with objective pricing experts like NPI. We analyze thousands of enterprise IT deals a year and have visibility into what constitutes a fair price for your solution requirements.

3. What is a fair price based on your existing spend with the vendor?

How much you spend with a vendor has significant bearing on whether or not your deal pricing is quantifiably “fair.” This is one of many levers IT buyers can pull during the negotiation process to secure pricing that’s at or better than fair market.

4. What non-price incentives should be negotiated with the vendor?

Negotiated savings fall into one of two buckets – hard savings (e.g. X% off list) and soft savings (e.g. professional service credits or other freebies). Most IT price benchmarking efforts focus on the hard dollar savings. But it’s important not to overlook the value of soft dollar savings, particularly for those IT buyers that have a clear picture of their current and future-state IT roadmaps. A vendor that’s not willing to move on price may be willing to throw in free services, discounted pricing on other solutions in their portfolio, etc. These things may not lower the cost of the purchase/renewal right away, but they can reduce overall spend with the vendor in the future.

5. For bundled solutions, what does line-item pricing look like and how does that compare to competitive alternatives as well as what your peers are paying?

Vendors love to bundle their solutions – particularly enterprise software vendors. The challenge is bundled pricing obscures what customers are paying for each component, and whether that pricing is within fair market value range. And considering most customers don’t end up using everything in the bundle, the opportunity for overspending is a double whammy. NPI strongly recommends customers demand line-item pricing to be sure they’re paying a fair price for the elements they actually plan on using.

NPI: Fair Market Value for Enterprise IT

At NPI, we provide actionable, transaction-specific information that eliminates IT buying blind spots. We lift the veil on market price for IT purchases through four primary steps:

1. Validate: We objectively determine whether you have a best-in-class offer and, if not, quantify (and close) the gaps.
2. Optimize: Define the licensing, subscription, and business terms that best fit your company’s needs.
3. Negotiate: Arm you with vendor-specific intel and leverage so they can negotiate the best deal possible.
4. Align: Get your IT buying team on the same page and working toward a defined, shared target outcome.

If you want to learn more about NPI’s IT price benchmark analysis services, contact us. We’d be happy to discuss how our 100% objective IT procurement advisors are helping organizations like yours save millions each year.