Managing SAP Contract Renewals – Avoiding Uplifts and Securing Price Caps

Managing SAP Contract Renewals

Introduction – Renewals as a Critical Negotiation Moment

Renewing your SAP contracts isn’t a routine administrative task it’s a make-or-break negotiation opportunity.

SAP often treats contract renewals as a chance to increase revenue, whether through annual support fee “uplifts” or higher cloud subscription costs. Many customers simply accept these uplifts passively, only to discover that small percentage increases compound into millions of dollars over a few years.

As a CIO, CFO, or procurement leader, you should approach each SAP renewal with a strategic mindset. The goal is simple: prepare early, negotiate hard, and lock in protections against unchecked price hikes. Read our SAP Support and Contract Terms Overview.

Renewal time is critical because it’s one of the few moments you have leverage over SAP. Before the renewal date, SAP is motivated to keep your business. Once you sign, you’re locked in to their terms for the term of the contract.

In this guide, we’ll explore practical tactics for SAP renewal negotiation – from avoiding surprise price uplifts to securing caps on future increases.

The focus here is commercial and negotiation insights (not technical processes) that put you, the customer, first. Short-term complacency at renewal can lead to long-term budget pain, so let’s dive into how to turn the tables in your favor.

Maintenance Renewals – Fixed % but Tricky Base

If your organization uses traditional on-premises SAP software, you’re likely paying annual maintenance fees (typically SAP Enterprise Support at 22% of your net license value per year).

On the surface, that percentage is fixed in your contract – but the devil is in the base. Over time, many companies find their license footprint has grown (new modules, additional users, etc.), which means the absolute maintenance dollars keep climbing.

Even without a rate increase, SAP’s revenue from you grows as your license base grows. This is especially problematic if you’re paying maintenance on “shelfware” – unused licenses that still incur support costs.

Strategy: Don’t passively pay maintenance on software you no longer need.

Before renewal, conduct a thorough audit to identify unused or under-used licenses.

SAP won’t remind you that you have 200 licenses sitting idle – it’s on you to find and address that shelfware.

You have a few tactics at your disposal:

• Terminate or trade-in shelfware: If certain licenses or modules are not providing value, consider terminating their maintenance. This typically means you give up the right to use or upgrade that software, but it stops the ongoing 22% yearly charge on their value. In some cases, SAP may allow you to swap unused licenses for credit toward new products that you actually need. This kind of trade-in can realign your spending with current business needs.
• Negotiate a flat or reduced support base: While SAP’s standard support rate is rarely discounted, large customers sometimes negotiate a custom deal. For example, if you commit to a multi-year renewal, you might secure a small discount or at least freeze the support fee at a fixed amount for a period of time. It never hurts to ask – SAP may agree to price increase cap terms for strategic clients, such as capping maintenance fee growth at 0–3% per year, or even holding it flat for a couple of years. Make sure any such cap is explicitly written into the contract.
• Clean up before counting: Remember that SAP calculates your maintenance bill on the licenses active at renewal. Remove any excess users or engines before that snapshot. If you plan to retire a software component, do it prior to renewal so you’re not stuck paying support on it for another year or more.

Maintenance renewals might seem straightforward (22% per year is the norm), but savvy customers realize they can optimize the “base” on which that percentage is calculated.

Reducing your license footprint right before a renewal can translate into immediate savings and a lower ongoing cost structure.

In short, don’t pay for what you’re not using – and don’t assume you have to maintain the status quo. SAP’s not going to volunteer a reduction; you have to initiate it and negotiate it.

For more insights, SAP Support Tiers Explained – Enterprise vs Standard vs MaxAttention (and When to Consider Third-Party)

Cloud Subscription Renewals – The Uplift Risk Zone

For SAP cloud subscriptions (whether it’s S/4HANA Cloud, SuccessFactors, Ariba, or other SaaS offerings), the renewal stage is often where the biggest price shocks occur.

Unlike on-prem maintenance, which has a fixed percentage, cloud contracts often bake in annual uplifts – for example, a clause that your subscription fees increase by 3-5% each year, or tied to an inflation index.

Over a multi-year subscription, these seemingly small bumps can add up.

Worse, many initial cloud deals include significant discounts to win your business; at renewal, those discounts might expire, leading to a sudden jump in cost if you’re not careful.

Risk factors in cloud renewals:

If your contract lacks protective language, SAP could raise your rates substantially at renewal. We’ve seen scenarios where after a 3-year term, SAP’s renewal quote comes in 15-20% higher than your previous rate – an unwelcome surprise for your budget. Why does this happen?

Sometimes the original deal had a “welcome” discount that isn’t guaranteed to carry forward. Other times, SAP may use a generic CPI clause (inflation-based increase) which, in high-inflation years, could justify a high single-digit price hike.

And if you quietly accept auto-renewal, you might be hit with whatever standard increase SAP chooses to apply.

Strategy: Secure caps and avoid blind uplifts.

The renewal negotiation is your chance to put a lid on future cost escalations:

• Negotiate a maximum uplift (price increase cap) for any renewal periods. For example, insist on contract language that “subscription fees shall not increase by more than 3% at renewal”. If possible, push for a 0% increase (price freeze) for the first renewal, or for a multi-year extension at locked pricing. SAP may not volunteer this, but if retaining your business is important to them, they often will agree to some cap like 3% or lower. This protects you from, say, a 7% or 10% jump in one year.
• CPI-based limits: If SAP insists on using a CPI (Consumer Price Index) clause for annual increases, tailor it to your advantage. Tie it to the local CPI of your primary operating region (to avoid paying for higher global inflation) and, critically, add a ceiling – e.g. “CPI increase capped at 3%”. Without a cap, a high-inflation period could stick you with an 8%+ hike, as many companies experienced recently. With a cap, even if inflation runs wild, your increase is limited.
• Avoid automatic renewals at preset uplifts: Sometimes cloud contracts include auto-renewal terms where if you take no action, the contract renews for another term with a predefined uplift (say +5%). This can remove your chance to renegotiate. It’s far better to have the renewal be a mutual agreement or at least have a window to renegotiate terms. If auto-renewal is in the contract, diary the notice period and be sure to send a formal notice to prevent an automatic lock-in. The goal is to force a discussion at each renewal, not let the contract just roll over at whatever terms SAP dictates.

Another key consideration for cloud deals is flexibility in quantities. Business needs change – you might need fewer licenses next year if your headcount drops or you divest a business unit.

Ensure your SAP contract allows downsizing at renewal without penalty.

This means negotiating upfront that at renewal time, you can reduce the number of subscriptions or switch out modules.

SAP’s default stance is often “no reductions,” but this is negotiable.

Perhaps you commit to a certain overall spend but gain the right to reallocate or reduce user counts as needed. Without this, you could be stuck paying for peak usage levels even if you no longer require them.

In summary, treat cloud subscription renewals as high-risk, high-reward negotiation moments. It’s the zone where SAP will attempt to regain margin or increase your spend, but also the time you can claw back control by capping and containing costs for the next term.

CPI Clauses – How to Control Them

“CPI clauses” are a common way SAP (and many enterprise software vendors) justify yearly price increases. The idea is the contract allows an annual price adjustment based on an official inflation index (such as the Consumer Price Index).

SAP often pitches this as a fair mechanism – “if costs of living go up 5%, our prices go up 5%.” However, as we’ve seen in recent years, inflation can spike unexpectedly, and an uncapped CPI clause could lead to very large increases.

For instance, if your contract year aligned with a period of 7% inflation, SAP could raise your fees 7%. That’s well above the typical 2-3% many budget for, and it can blow a hole in your IT budget.

Can you negotiate CPI clauses? Absolutely. Never accept an uncapped CPI increase as an immutable standard.

Here are ways to tame those clauses:

• Set a maximum cap: This cannot be stressed enough. If SAP insists on CPI-based increases, negotiate a cap like “whichever is lower: CPI or 3%”. This way, in a high inflation scenario (say CPI = 6%), your increase is limited to 3%. You benefit if inflation is moderate or low, but you’re protected if it surges.
• Limit the frequency: You could negotiate that no CPI increase applies for the first one or two years of a contract, especially if you’re signing a multi-year deal. For example, “no CPI adjustment for the first 2 years, then at most once annually thereafter”. This gives you a short-term freeze to realize value from the investment before any hikes kick in.
• Specify the index and region wisely: Make sure the contract clearly defines which CPI index is used (e.g., US City Average CPI or Eurozone CPI depending on where your primary use is). If your business operates mainly in a low-inflation country, you don’t want SAP using some broader or higher-inflation metric. Pin it to the economic reality that reflects your situation, not a generic global number that might be higher.
• Negotiate alternatives: In some cases, you might convince SAP to forego a CPI clause in exchange for a simple fixed uplift that’s lower than recent inflation. For example, instead of “CPI (uncapped)” you might settle for “2% fixed increase annually”. This gives certainty and usually ends up cheaper if inflation remains high. Of course, if inflation goes back down to 1%, you’d slightly overpay, but many finance teams prefer predictability over volatility.

The key with any CPI clause is to avoid open-ended exposure. We’ve learned from the past that “standard” clauses can result in non-standard price jumps when the economy shifts.

During negotiation, question the necessity of any increase: “If we’re committing to SAP’s platform, why must there be any increase at all next year?” You may not eliminate it entirely, but by showing you’re informed and prepared to push back, you can at least keep it to a minimal, predictable level.

Negotiation Approaches for Renewal Events

When that renewal date is on the horizon, it’s time to exercise leverage.

A savvy SAP contract renewal strategy treats the renewal as more than just a date on a calendar – it’s an event you can use to improve your terms.

Here are several negotiation approaches to consider:

• Bundle leverage: If you anticipate needing additional SAP products or licenses, bundle those discussions with the renewal. SAP sales teams love selling net-new products. You can use that to your advantage by saying, for example, “We’re considering purchasing module X or expanding into SAP cloud service Y, but we need to sort out a favorable renewal on our existing contract first.” By tying new business to the renewal, you give SAP an incentive to be more flexible. They might offer a discount on the new purchase and hold your renewal pricing steady to secure the combined deal. In essence, you’re offering SAP a win (new revenue) in exchange for concessions on the renewal.
• Competitive pressure: SAP needs to know that you have options (even if switching away is a big move, the threat needs to be credible). Consider initiating RFPs or getting quotes for alternative solutions – whether that’s a different software vendor or a third-party support provider. You can tactfully let SAP know that you’re exploring these alternatives. For instance: “We’re evaluating other HR systems in case we can’t reach a reasonable renewal on SuccessFactors.” Even if you fully intend to stay, implying that you might walk away creates pressure. No vendor likes the idea of losing a customer, especially to a competitor. This competitive backdrop often makes SAP more willing to negotiate price caps, discounts, or flexible terms to keep you in the fold.
• Temporary relief and economic conditions: If your company or industry is facing a downturn, don’t hesitate to bring that context into negotiations. You can request a price freeze or a deferral of uplift due to business challenges. During the COVID-19 pandemic, for example, some customers asked for (and received) a one-year freeze on maintenance increases because of the extraordinary situation. SAP may not advertise it, but in tough times or if you make a strong case, they sometimes agree to short-term relief measures. The key is to ask and substantiate why it’s needed.
• Renewal flexibility (downsizing and exit rights): As mentioned earlier, negotiate the right to adjust your usage at renewal. This is often called a “true-down” provision when talking about reducing license counts. Ensure your renewal agreement doesn’t lock you into the same or higher quantities regardless of actual need. In the cloud context, push for opt-out clauses or shorter renewal terms if you’re unsure about long-term fit. For example, instead of auto-renewing a 3-year term, maybe renew for 1 year with an option to extend, giving you an escape hatch. Flexibility can also mean aligning all your SAP contracts to co-terminate, so you have a single negotiation covering all products – which can amplify your leverage.
• Escalate and use executive relationships: If negotiations bog down with your SAP account manager or their immediate boss, don’t be afraid to escalate within SAP. Higher-level SAP executives have discretion to approve concessions (like a price cap or discount) if the deal is strategically important. A CIO-to-SAP-exec conversation can sometimes break a stalemate. This approach should be used carefully and respectfully – but it can signal that you mean business and expect a fair deal.

Throughout all these approaches, timing is vital. Always start the renewal negotiation well in advance (as we’ll outline in the checklist below). SAP knows when you’re up against a deadline, and if you engage too late, they have the upper hand.

By beginning early, you can compare alternatives, marshal internal support, and even schedule the final deal to close at a time when SAP is most eager (for example, aligning with their quarter-end or fiscal year-end when they are hungry to close sales).

A proactive negotiation stance flips the dynamic – SAP will have to respond to your agenda, rather than you scrambling to meet theirs.

SAP Renewal Risks and Mitigations

To frame your negotiation strategy, it helps to recognize the common risks in SAP renewals and how SAP typically approaches them to their advantage.

Below is a quick-reference table of key risks and what you can do to mitigate each:

As the table shows, each risk can be countered with proactive measures. The overarching theme is awareness and action: know the tricks (like auto-renew or inflation uplifts) and plan ahead to neutralize them.

SAP contracts are full of these small clauses that can bite you later, so comb through them before renewal and address the ones that could hurt your company.

Renewal Timeline Checklist

Successful SAP negotiation is as much about timing and process as it is about the deal points.

Below is a checklist timeline to help you prepare for a major SAP contract renewal:

• ✓ 15 months out: Begin internal discussions and conduct a full audit of SAP usage. Identify which licenses or subscriptions are actually used, and which are candidates for removal or downgrade. Start gathering historical spend data and performance metrics to inform your strategy.
• ✓ 12 months out: Define your objectives, requirements, and budget for the renewal. Assemble your negotiation team (IT, procurement, finance, legal, and executive sponsor) and agree on your ideal outcomes and walk-away points. If needed, engage external experts or benchmark data at this stage.
• ✓ 9 months out: Open communication with SAP. Let them know you’re looking ahead to the renewal and outline any initial expectations or concerns (for example, “we will need to discuss a price increase cap and rightsizing our licenses”). This signals to SAP that you’re a proactive customer. Also, this is a good time to explore alternative options quietly (e.g., getting a quote from a third-party support firm or exploring competitive products) to gather leverage.
• ✓ 6 months out: You should have SAP’s initial renewal proposal by now. Analyze it carefully. Likely it will include the standard uplifts or unfavorable terms if unchanged. Formulate your counter-proposal. Push back on increases, propose your capped or reduced pricing, and highlight any issues. If SAP’s response is slow or insufficient, consider escalating to higher management. This is also the time to involve your executive sponsor to apply pressure if needed.
• ✓ 3 months out: Aim to wrap up principal commercial terms by this point. Finalize any special terms like downsizing rights, CPI caps, or discount percentages. Engage legal teams to review the contract language ensuring all negotiated points are accurately reflected (e.g., the exact wording of that 3% cap or flexibility to drop users at renewal). There should be no “hidden” terms left unaddressed.
• ✓ Renewal date: Execute the new agreement with all your negotiated protections in place. Congratulations – but don’t relax too long. Immediately set reminders for any future notice dates (like if you need to cancel by a certain date to avoid auto-renewal next time). Also, document any promises SAP made that might not be in the contract (and try to get them in writing via email at least). Debrief internally on what went well and what to improve next time.

Following a structured timeline ensures you’re never caught off guard. It transforms renewal from a reactive scramble into a planned project. Remember, SAP’s team is preparing well in advance – you should too. A last-minute approach is a recipe for leaving money on the table.

FAQs

Q: Can SAP reduce prices at renewal?
A: While SAP is not known for voluntarily reducing prices, it is possible to achieve cost relief with skillful negotiation. SAP’s official stance is usually to maintain or increase fees, but if you’ve been over-licensed or over-paying, you can push for reductions by cutting out shelfware or negotiating a lower price for a longer commitment. Don’t expect SAP to say, “Great news, we cut your bill!” unless you’ve given them a reason. However, you can secure discounts on new licenses or one-time credits as part of a larger deal. In short, direct price drops on existing fees are rare, but overall spend can be reduced if you negotiate assertively and trim what you don’t need.

Q: What happens if we non-renew and later rejoin support?
A: If you decide not to renew SAP support (for on-premises licenses) and then want to rejoin later, be prepared for significant penalties. SAP typically charges backdated maintenance fees for the lapsed period (often 100% of what you would have paid in that time, sometimes with interest) before reinstating support. In practice, this means you save nothing by leaving and coming back – you’d pay all the missed years anyway. Additionally, during the time off support, you won’t get updates or help, and if something breaks, you’re on your own. This harsh policy is designed to discourage customers from ever leaving support. The better approach, if considering dropping maintenance, is to look at third-party support providers who charge less; just know that returning to SAP’s good graces later will be costly.

Q: How do auto-renewals impact cloud subscriptions?
A: Auto-renewal clauses in cloud subscriptions can be dangerous if you’re not paying attention. If your SAP cloud contract auto-renews, it means that unless you give notice by a certain date, the contract will roll over for another term (often one year) under the pre-defined conditions. Those conditions usually include an uplift in price. For example, your contract might say it auto-renews with a 5% increase. If you miss the window to renegotiate or cancel, you’ll be stuck with that increase and locked in for another year (or whatever the term is). Auto-renewals take away your chance to negotiate at that renewal point. To manage this, always diarize the notice period and decide well in advance if you want to renew, change, or cancel. We recommend negotiating out auto-renew clauses if possible, or at least requiring SAP to reconfirm pricing with you before renewal rather than it being automatic.

Q: Can we reduce quantities at cloud renewal?
A: Yes – but only if you negotiated that flexibility. By default, SAP often expects you to renew the same number of users or modules in a cloud subscription. However, circumstances change, and you might need fewer. If your initial contract or renewal negotiations include a “true-down” or flex clause, you can absolutely decrease quantities at renewal. Without it, SAP might hold you to the original number (or impose a penalty for reducing). Always bring this up during negotiations: explicitly ask for the right to reduce users, storage, or whatever units your cloud service uses at renewal time without financial penalty. If SAP knows usage dropped, sometimes they’d rather reduce your spend than lose you entirely – but you must make it a term of the deal. So, plan for future downsizing rights in writing.

Q: Are CPI clauses always negotiable?
A: Nearly always, yes. SAP may present their standard CPI clause as boilerplate “company policy,” but in truth everything is negotiable if the deal size and your leverage justify it. Many SAP customers have successfully negotiated caps on CPI increases, or even removed the CPI clause in favor of a fixed uplift (or no uplift for a period). The key is to raise the issue and not accept it at face value. If your SAP rep insists “everyone accepts this,” don’t be swayed – you can point out that recent CPI spikes make an uncapped clause unacceptable to you. In negotiations, propose a reasonable cap (like CPI with a maximum of 3%) or a freeze for a couple of years. Often, SAP will come back with a compromise, especially if you are a valuable customer or if you’re bundling a renewal with new purchases. The worst case is they say no, but at least you tried. In most cases, you’ll get some relief. Always remember: what’s in your contract is ultimately up to what both parties agree – SAP’s “standard policy” can bend if the deal is important enough.

Five Expert Recommendations

To wrap up, here are five expert tips to remember as you formulate your SAP contract renewal strategy:

1. Always audit usage and remove shelfware before renewal. Free up budget by not paying for software you don’t use. This strengthens your position and reduces waste.
2. Treat CPI clauses as negotiable — never accept uncapped inflation increases. Aim to cap or eliminate them. Price stability is critical for long-term planning.
3. Bundle renewals with new purchases to unlock leverage. Use any new SAP investments as bargaining chips to improve renewal terms (and vice versa).
4. Secure rights to downsize at cloud renewal. Ensure you can adjust quantities or scope without penalty, so you pay only for what you need each term.
5. Start 12–18 months early — timing is your best weapon. Early preparation and negotiation give you the breathing room and leverage to achieve the best deal, well before deadlines pressure you into bad terms.

By following these strategies, you can turn SAP renewals from dreaded cost hikes into an opportunity to lock in price caps, eliminate unwanted spend, and secure more favorable terms. Remember, the power is largely in your hands if you plan ahead and negotiate assertively. SAP will always seek to maximize its revenue – it’s your job to ensure that your organization isn’t an easy target for those uplifts. Good luck with your next SAP renewal negotiation, and go into it knowing you’re prepared to push back and protect your interests.

Read about our SAP Advisory Services

Do you want to speak with us about our SAP Services?

Please enable JavaScript in your browser to complete this form.

Name *

First

Last

Email *

Company

Message *

Submit