Negotiating GROW with SAP Contracts
Introduction – Why SMBs Can Still Negotiate Hard
Small to midsize businesses often assume they lack leverage when dealing with a giant like SAP.
However, midmarket buyers can and should negotiate assertively even when signing up for SAP’s new GROW with SAP cloud ERP offering. Why? SAP is eager to grow its cloud customer base, especially in the midmarket segment, and every new “cloud logo” counts toward that goal.
This means SAP’s sales team is motivated to close deals with SMBs, not just Fortune 500 firms. In practice, SAP will make concessions to win your business – if you ask for them.
By negotiating hard on key terms, SMBs can secure significant discounts and favorable conditions.
The bottom line: being smaller doesn’t mean settling for SAP’s first offer. With the right approach, you can strike a deal that protects your budget and future-proofs your investment. Read our guide to Grow with SAP Licensing.
Leverage Points for SMBs
Even without enterprise spend levels, SMBs have leverage points they can use in negotiations:
- Offer to be a reference or case study: SAP craves success stories in the midmarket. If you’re willing to serve as a reference customer or provide a testimonial, SAP may reward you with better pricing or extras. Being a public proof point (through press releases, speaking at events) can translate into extra goodwill and concessions.
- Time your deal with SAP’s sales cycles: End-of-quarter or, better yet, end-of-year is prime time to strike a bargain. SAP reps have quarterly and annual targets. As those deadlines loom, discounts tend to increase. Plan your negotiation so that final approval happens right before SAP’s quarter or fiscal year ends – you’ll find them far more flexible on price to get the deal signed.
- Leverage competitive alternatives: Make it clear that you’re evaluating other solutions like Oracle NetSuite, Microsoft Dynamics, or Workday. Even if you intend to go with SAP, letting them know you have options creates competitive pressure. SAP knows midmarket buyers could choose a rival cloud ERP, so they’ll work harder (on price and terms) to ensure you don’t defect. Use that to your advantage.
These leverage points remind SAP that your business is valuable and not guaranteed. A savvy SMB can use references, timing, and competition to punch above its weight in negotiations.
Key Negotiation Areas
When negotiating a GROW with SAP contract, focus on several critical areas that can make or break the value of your deal:
Price per User/FUE
Licensing for GROW with SAP is typically priced per user, often measured in Full User Equivalents (FUEs).
Don’t take SAP’s first price as final. Large enterprises often secure discounts of 50% or more off list prices, and while an SMB might not reach that level, you should target a minimum of 25–35% off list for your subscription fees.
Start by anchoring your counteroffer even lower than your true target – SAP’s sales team expects negotiation, so an aggressive opening bid is normal.
Always ask for a bigger discount than you need; you can concede down to your ideal 30% off, but only if you start low. Also, request a detailed price breakdown (listing the list price and discount per item or user type) to ensure that no component is under-discounted.
By showing you’ve done your homework on pricing, you signal that you won’t settle for a token discount. Ultimately, every percentage point off list price counts for an SMB’s budget, so push confidently for a substantial price reduction.
Read, RISE vs GROW with SAP – Licensing and Strategy Comparison.
Contract Term & Renewal Caps
Cloud contracts like GROW with SAP often span multiple years – use that to your benefit. Aim for a multi-year term (typically 3 years) to lock in pricing and provide stability for your organization. In return for a longer commitment, ask SAP for better initial pricing and protections on renewals.
One critical term to negotiate is a cap on renewal price increases. Without a cap, many customers are shocked when, after the initial term, fees jump by 10–20% because the original discount expired or list prices rose.
Avoid this by stipulating that renewal increases are capped (for example, no more than 5% per year or a similar modest rate). Even better, try to get the right to renew at the same discount percentage you had initially, so you’re not paying closer to list price later.
Avoid automatic renewal at list price – insist on an opportunity to renegotiate or cancel if terms aren’t favorable. By locking in caps and renewal terms upfront, you protect your company from “sticker shock” down the road and ensure pricing remains predictable.
Included Services
The software subscription is only part of the equation for a successful SAP deployment. Don’t overlook services and extras that can be bundled into your GROW with SAP contract. As an SMB, you likely don’t have a massive IT staff or a large consulting budget, so any included help is valuable.
Ask SAP to include onboarding and training as part of the deal – for example, free access to SAP training courses, “migration starter pack” services to help move your data, or several hours of consulting support from SAP or a partner. These inclusions can save you tens of thousands that you’d otherwise spend separately.
If you’re working with an implementation partner, try to negotiate a fixed-cost implementation package or credits/vouchers toward implementation services. This transfers the risk of cost overruns to the vendor.
SAP and its partners often have preset implementation offerings for midmarket clients (sometimes called rapid deployment or express packages).
Push to have such services bundled at low or no cost. Remember, a smooth implementation means a happy customer – SAP has a stake in your success, so leverage that to get as much help as possible included in your contract.
Growth Flexibility
Your business today might look very different in a couple of years.
Ensure your SAP contract can adapt to your growth (or potential downsizing).
Negotiate volume discounts upfront: if you anticipate needing more users in the future, lock in pricing tiers so that, for example, when you exceed 100 users, the per-user cost drops by a certain percentage.
SAP often provides better pricing at higher volumes, but you want that in writing for future expansions. This way, as you grow, you automatically benefit from a lower unit cost without having to renegotiate from scratch. Conversely, protect yourself in case you overestimated user count or your needs shrink: secure the right to reduce licenses at renewal without penalty.
Many standard contracts make you commit to several subscriptions and simply renew the same or more; try to include a clause that at the renewal of your term you can decrease the number of users or switch out modules if they’re not needed.
Some savvy SMBs even negotiate a small “usage downturn” clause allowing a one-time reduction mid-term (for example, after year 1, you can reduce seats by 10% if they’re not being used).
The key is to avoid paying for shelfware. Ensure your contract lets you scale up easily and scale down responsibly as your business evolves.
Exit & Downgrade Options
While you’re focused on starting with GROW with SAP, also think about exit strategies and future changes. What if your needs outgrow GROW with SAP? Perhaps in a few years, you might consider SAP’s larger-scale offering (RISE with SAP) or a different solution. It’s wise to negotiate transition options now.
If there’s a chance you’ll upgrade to RISE with SAP (which is a more comprehensive bundle for enterprises, including private cloud and additional services), ask for transition credits or price protections. For example, if you move to RISE, a portion of your remaining GROW subscription value could be applied to the new contract, or the switch can happen with minimal overlap fees.
Also aim to minimize any termination penalties. Standard cloud contracts might not let you cancel early without paying for the full term. Still, you can negotiate more flexibility at renewal points or for specific situations (like a merger or acquisition).
Even if you don’t foresee leaving SAP, having a “no-trapdoor” clause – such as being able to leave at the end of the term with no auto-renew or heavy penalty – keeps SAP motivated to continue earning your business.
In summary, build an escape hatch: you hope never to use it, but it’s there if you need it, and it gives you leverage in future negotiations.
Common Pitfalls for SMBs
Midmarket customers new to SAP can stumble into several traps during contracting.
Be aware of these common pitfalls – and avoid them:
- Overbuying licenses: It’s easy to overestimate your needs (especially with SAP sales nudging you to “plan for growth”). Buying too many user licenses or extra modules upfront leads to shelfware – software you pay for but don’t use. Stay realistic and purchase what you need now with the option to add later, rather than overspend on a hypothetical future need.
- Ignoring hidden costs: The subscription fee isn’t the only cost. Don’t ignore adjacent expenses like data migration, integrations, and environments. For example, migrating historical data from your old system to SAP might require additional tools or consulting hours. Integrating SAP with other apps (CRM, e-commerce, etc.) could mean you need SAP’s integration services or middleware. Even additional sandbox or test systems beyond the basics might cost extra. Clarify these costs upfront or negotiate some of them into the deal, so you’re not hit with surprises later.
- Failing to secure renewal protections: As mentioned, many SMBs focus only on the initial price and forget about renewals. If you don’t negotiate caps or conditions on renewal, you could face steep price hikes after your first term. It’s a pitfall to sign a “great first-term deal” only to realize it was a Trojan horse when year 4 comes and you have no leverage. Always think two steps ahead to renewal while negotiating the initial contract.
- Underestimating support and implementation needs: Implementing a new ERP is challenging for a small IT team. Some SMBs assume that once they buy the software, everything will just fall into place. Then they struggle during deployment or early usage because they didn’t budget for sufficient support. Don’t underestimate the need for training, change management, and ongoing support. Negotiate for onboarding assistance – whether it’s dedicated support from SAP, some consulting hours, or premium support tier upgrades – as part of your package. Ensuring you have help when you need it will save your project from failure.
By keeping these pitfalls in mind, you can proactively address them in the contract (or in your internal planning) and ensure your GROW with SAP journey stays on track and within budget.
SMB Negotiation Checklist
Use this quick checklist to ensure you’re covering the essentials of a GROW with SAP deal. For each area, we list a “Must-Have” (your target outcome) and a “Red Flag” to avoid:
| Area | Must-Have (Goal) | Red Flag to Avoid |
|---|---|---|
| Discount | Aim for 25–35% off list price (or better) | Only getting a token <10% off list |
| Renewal | Cap renewal price increases at 5% or less per year | Automatic renewals at full list price |
| Services | Include training, migration, onboarding support in the deal | No implementation help or no onboarding included |
| Growth | Pre-negotiate volume discount tiers as you add users/modules | Fixed pricing with no discount for growth |
| Exit | Get RISE upgrade credits or flexible exit terms in writing | Rigid contract with heavy penalties for changes |
Keep this checklist handy during negotiations. If you see any Red Flags in drafts of the contract, address them before signing.
Each Must-Have is there to ensure your SMB gets a fair and flexible deal, rather than being locked into unfavorable terms.
FAQs
- Can SMBs negotiate like big enterprises? → Yes, you can negotiate terms and discounts much like a large enterprise – the percentages might differ, but SMBs absolutely can win concessions.
- Will SAP walk away if I push too hard? → No. SAP won’t walk away simply because you drive a hard bargain. They want to capture cloud market share and acquire new customers, so be confident in your requests.
- Should I involve a third-party advisor? → If you lack internal expertise with SAP contracts, yes. A seasoned negotiation advisor can uncover hidden levers and ensure you’re getting the best deal.
- Can I get partner quotes in addition to SAP’s direct quote? → Absolutely. SAP often sells its products through partners in the midmarket. Solicit quotes from certified SAP resellers or partners – a little competition can improve your pricing and terms.
- What if I grow out of GROW with SAP? → Plan for that now. Negotiate upfront that if you need to move to a larger SAP solution (like RISE with SAP), you’ll receive credits or a seamless transition. This way, you won’t be penalized for success if your company’s needs expand beyond the GROW offering.
Five Expert Recommendations
- Aim for at least a 25–35% discount off list price – Don’t settle for single-digit discounts; push SAP to meet your target by emphasizing your value as a customer and using timing to your advantage.
- Lock in renewal caps to prevent price creep – Ensure your contract limits any year-over-year price increase (e.g., a 5% cap) so you won’t face a nasty surprise when it’s time to renew.
- Bundle in migration and support services – Treat services as negotiable. It’s often better to get training, data migration, and onboarding help included now than to pay extra for them later.
- Use competitor quotes and SAP’s fiscal deadlines as leverage – Remind SAP you have other options and schedule your deal-making around their quarter/year-end; this combination is proven to extract better terms.
- Negotiate flexibility for future changes – From the ability to scale your users up/down to getting credit if you migrate to RISE, bake in flexibility. It will save you money and headaches in the long run.
By following these expert tips and the playbook above, SMB leaders can approach a GROW with SAP contract with confidence.
Remember, SAP wants your business – and with preparation and the right strategy, you can secure a cloud ERP deal that drives your company’s growth on fair and favorable terms.
Negotiation isn’t about conflict; it’s about partnership – setting the stage for a successful relationship where both you and SAP can thrive.
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