Understanding SAP Discount Benchmarks: Are You Getting a Good Deal?
Negotiating an SAP contract can feel like walking into a maze of pricing and terms.
For an in‑depth overview of SAP negotiation topics, read our Ultimate Guide to SAP Contract Negotiations.
You might have a quote in hand with what seems like a generous discount – but is it a good deal by industry standards? This is where SAP discount benchmarks come in.
By understanding typical discount ranges and the factors that influence them, CIOs and sourcing managers can determine whether their SAP quote is fair and use that insight to negotiate more favorable terms.
In this article, we’ll break down common SAP licensing discount benchmarks for on-premises licenses, cloud subscriptions, and RISE with SAP discount norms.
We’ll also explore the factors that drive these discounts, a playbook to benchmark your quote step-by-step, tactical negotiation moves to push for more savings, and how to avoid common pitfalls.
The goal is to make it easy to read and apply – so you can benchmark SAP pricing confidently and ensure you’re not leaving money on the table.
Why Benchmarking SAP Discounts Matters
When it comes to SAP pricing, knowledge is power. Too often, companies make the mistake of accepting the first quote SAP provides, not realizing that nearly everything is negotiable.
SAP’s official price list is typically just a starting point – almost no enterprise customer pays the full sticker price. If you don’t benchmark your SAP discounts against what other companies are getting, you’re essentially negotiating in the dark.
Why does benchmarking matter?
Consider this: if similar enterprises are routinely receiving 50% off the list price on a particular SAP product, and your quote only reflects a 20% discount, you might be significantly overpaying.
Benchmarking your deal against the market norms offers a reality check. It ensures you don’t overpay, and it arms you with data to strengthen your negotiation position.
For example, being able to tell SAP, “Our peer companies usually see a 50-55% discount on this license type,” immediately signals that you are familiar with the prevailing rates and expect the same treatment.
Beyond pricing fairness, benchmarks help you justify decisions internally.
CIOs and procurement leads can demonstrate to CFOs or finance teams that industry standards justify a hard-line stance in negotiations. It also highlights opportunities for savings – perhaps you discover you left money on the table in a previous deal.
That insight can motivate you to renegotiate at renewal or push for concessions now. In short, benchmarking SAP discounts means dealing from a position of information and leverage, rather than relying on guesswork or sales hype.
Building a Winning SAP Negotiation Strategy
Benchmark Ranges at a Glance
What kind of discounts are typical in SAP deals? While every deal is different, there are well-known SAP discount benchmarks for various types of purchases.
Here’s a glance at common discount ranges for different SAP offerings:
- On-Premises Perpetual Licenses: For traditional SAP software licenses (e.g., SAP ECC or S/4HANA user licenses that you buy once and own perpetually), a typical SAP perpetual license discount range is around 40%–60% off the list price. In competitive, well-negotiated situations, this is standard. Very large deals or strategic, must-win contracts can sometimes see even deeper cuts (70%+ off in exceptional cases), whereas a smaller deal or a first offer might be only 20–30% off. The bottom line: it’s rare for enterprise customers to pay anything close to full list price for on-prem licenses if they negotiate assertively.
- SAP Cloud Subscription Discounts: For cloud-based products and subscriptions (e.g., SAP S/4HANA Cloud, SuccessFactors, Ariba, or other SaaS offerings), the discount percentages tend to be lower than those for on-premises solutions. SAP cloud subscription discounts typically fall within the 10%–30% range of the quoted subscription price. Why lower? Because cloud services are recurring and SAP is keen to preserve long-term revenue. That said, larger cloud deals or multi-year commitments can result in higher discounts. In some cases, big customers signing multi-year RISE with SAP contracts or large SaaS bundles have managed to get on the order of 40–50% off their initial cloud subscription quotes (often achieved through aggressive negotiation, bundling, and end-of-quarter timing). Keep in mind that cloud discounts might not always appear as a simple price reduction – they often come in the form of credits, free months of service, or add-ons included at no additional charge.
- RISE with SAP Bundles: RISE with SAP is a bundled offering (usually including S/4HANA Cloud, platform services, and technical services as a single subscription). Discounting can be a bit complex here because SAP may include various incentives to make the bundle more attractive. On paper, RISE discounts may appear modest, but when you factor in incentives such as migration credits, free services, or flexible contract terms, the effective discount can be substantial. It’s not unusual to see 20%–50% effective discount compared to what the bundle’s components would cost separately or compared to standard pricing. For instance, SAP has offered substantial credits (in one recent program, up to 60% of the first-year fees) to entice customers to migrate from on-premises S/4HANA to RISE. The key is to evaluate the overall value. RISE deals might include credits to offset implementation costs or free SAP Business Technology Platform (BTP) usage, which effectively lowers your cost, even if the subscription discount percentage is in the 20-30% range.
(Note: Annual maintenance fees for on-premise licenses are typically 22% of the net license price by SAP’s standard. SAP generally doesn’t discount maintenance rates, so the best “discount” you get on maintenance is by negotiating a bigger license discount upfront (since maintenance is calculated on your net price) or by capping maintenance increases over time. Always ensure in your contract that maintenance is calculated on the discounted license value, not the list.)
Using these benchmarks:
If your SAP quote is offering a discount significantly below the ranges above, that’s a red flag – it suggests your deal isn’t as competitive as it could be. For example, receiving only 25% off an on-premises license deal, while many peers get 50%, likely means you have room (and justification) to push for more.
On the other hand, if you’ve secured something at the high end (say 60%+ off on licenses or around 40% off a big cloud deal), you can be confident you’re driving a hard bargain. Just double-check there aren’t strings attached (like future price hikes or unwanted add-ons bundled in to pad the deal).
What Drives Discount Levels?
Not all SAP deals are created equal – several key factors influence how high a discount you can achieve. Understanding these can help you assess why your quote is at a certain level and how to improve it.
Here are the main factors that drive SAP discount levels:
- Deal Size and Volume: The bigger the deal (in terms of total spend or number of licenses/users), the more leverage you usually have. Large enterprise deals worth many millions at list price commonly achieve higher discounts (50% or more) because SAP is willing to give more to win a big contract. Consolidating purchases into one larger negotiation can be beneficial – for example, negotiating a single big agreement for multiple SAP products at once, rather than separate smaller deals, often yields a better overall discount. Volume-based tier pricing is built into SAP’s price lists, so as quantities or spend increase, the unit price decreases dramatically.
- Timing and End-of-Quarter/Year Pressure: Timing can be your friend. SAP sales teams have quarterly and annual targets, and they become especially motivated as those deadlines approach (SAP’s fiscal year ends December 31, so Q4 is typically crunch time). If you can time your negotiation to align with these end-of-quarter or year-end periods, you might unlock additional discounts. It’s not uncommon to see SAP suddenly improve a quote by an extra 5-15% as the quarter-end clock ticks down and they want your deal in the books. Use this to your advantage – start negotiations earlier, but be prepared to finalize as a fiscal deadline looms when SAP may be most flexible.
- Competitive Pressure (Alternatives in Play): One of the most powerful elements of SAP discount negotiation strategy is introducing competition or the perception of it. If SAP knows (or believes) that you are evaluating other options – whether it’s another ERP vendor like Oracle/Microsoft, a cloud alternative, or even considering delaying the project – they will work harder to win your business. Even if you fully intend to go with SAP, letting them know you have other ERP or solution bids on the table or that you’re not afraid to stick with what you have a bit longer creates pressure on SAP to sweeten the deal. Leverage your position by mentioning that you have cost concerns or alternative proposals; it often prompts SAP to present a better offer to secure your signature.
- Strategic Alignment and Value to SAP: SAP may offer larger discounts if your deal holds strategic significance for them. What does that mean? If your company is a well-known brand in a target industry, could serve as a reference or case study, or if your project aligns with SAP’s own strategic goals (e.g. you’re an early adopter of a new SAP product, or you’re moving to S/4HANA Cloud which SAP is pushing heavily), then SAP has extra incentive to make the deal attractive. Sometimes referred to as “strategic deals” or “lighthouse accounts,” these scenarios can prompt SAP to offer above-average discounts or special incentives. Similarly, if SAP is trying to prevent a high-profile competitive loss (for instance, by ensuring you don’t switch to a rival software), they might lean more heavily on pricing. Recognize if you have this kind of leverage – for example, being the first in your region to adopt a new SAP module, or agreeing to co-innovate with SAP, can translate into better pricing as SAP sees long-term value in your success.
- Existing Relationship and Spend: If you’re already a significant SAP customer spending a lot on annual maintenance or subscriptions, use that to your advantage. SAP has a strong interest in retaining and expanding its existing customer base. You can make the case: “We already invest $X million in SAP annually – we need to see a strong discount on this new deal as a sign of partnership.” Companies deeply invested in the SAP ecosystem often negotiate “loyalty” discounts on expansions or migrations (for example, moving from SAP ECC to S/4HANA might come with credits or discounted licensing to protect the existing relationship). Don’t be shy about reminding SAP of the business they could lose if the deal isn’t favorable – your current footprint gives you leverage.
- Contract Length and Commitments: Agreeing to longer contract terms or larger future commitments can lead to increased discounts. For instance, signing a three-year (or five-year) cloud subscription instead of a one-year term usually prompts SAP to offer a better rate, as it locks in your business for a longer period. Committing to a certain spend volume over a few years (like a phased rollout plan) can also help. However, a warning: only commit to what you realistically need. SAP may offer you a significant discount if you commit to doubling your licenses within two years; however, if you overcommit, you will either end up paying for unused licenses (known as “shelfware”) or facing penalties. While multi-year commitments can be a negotiation lever, align them with your actual plans.
In summary, the SAP discount benchmarks you can target will depend on a mix of these factors.
A small company won’t get 70% off like a Fortune 100 might, but that same small company might still get 30-40% by timing the buy right and entertaining competitors’ proposals. Know where you stand on these factors to set realistic but ambitious discount goals.
Negotiating S/4HANA Migration Deals
Step-by-Step Benchmarking Playbook
How can you effectively benchmark your SAP quote and utilize that information to inform your negotiations?
Below is a simple playbook to ensure you’re making an apples-to-apples comparison between your deal and the broader market, and identifying where to push SAP for better terms:
- Gather Peer Deal Data: Start by collecting information on what discounts other organizations (ideally of similar size/industry) have achieved in their SAP deals. This might come from informal peer networking, hiring a licensing advisor who maintains anonymized benchmark data, or using industry research. For example, find out the typical discount percentages peers received for similar products or packages. (Be sure to use only anonymous and legal sources – you don’t need specific company names, just ranges and averages to guide you.)
- Break Down Your Quote by Components: Don’t view your SAP proposal as a single lump sum. Dissect it into pieces: the license fees vs. cloud subscription fees, the maintenance charges, any one-time services or support included, etc. Benchmark SAP pricing for each component separately. You may discover that one part of the deal is fair while another is way off. For instance, perhaps your S/4HANA software license is 50% off (great), but the associated maintenance terms or a cloud add-on in the quote is priced without any discount at all. Understanding the makeup of the quote ensures you know exactly what to benchmark.
- Compare Against Benchmarks: Take each component and compare it to the benchmark ranges we discussed (or other reliable data you have). Are your on-prem license discounts in the 40-60% range typical for that kind of deal? How do your SAP cloud subscription discounts stack up against the common 10-30% norms? If you’re considering a RISE with SAP bundle, what’s the effective discount when factoring in all the components, and is it in line with what others report? Identify any components where your deal is noticeably less favorable than the benchmark (e.g., you’re only getting 15% off a cloud subscription where others average 25%).
- Highlight Gaps and Set Targets: Now that you have identified where your quote diverges from the benchmark, prioritize the largest gaps. Those are your negotiation targets. Maybe your licenses are fine, but your cloud services are overpriced, or vice versa. Determine what improvement you will ask for – e.g., “We aim to get the cloud discount up to 25% from the current 10%,” or “We want a larger migration credit in our RISE deal to match what we’ve heard other companies received.” By setting specific target improvements (grounded in real-world data), you give SAP clear directives on what it will take to close the deal. Use the benchmarks as an anchor: for instance, “Our goal is to at least meet the industry-standard 50% discount on licenses – we’re currently at 35%, which is below market – what can you do to close that gap?”
Following this playbook transforms benchmark data into an actionable negotiation plan. It’s about dissecting the deal, doing your homework on each piece, and approaching SAP with a data-backed argument for where you need a better deal.
Tactical Moves to Raise Your Discounts
Benchmarking will tell you where you might be overpaying – but how do you get SAP to move on pricing or terms?
Here are some negotiation tactics and strategies to help push SAP pricing to meet or beat industry norms:
- Leverage Competition and Alternatives: As mentioned earlier, one of the strongest cards you can play is letting SAP feel competitive pressure. Even if you have a preferred direction, create a scenario where SAP believes they could lose the deal. This might involve obtaining a quote from a competitor (such as Oracle, Microsoft, or Workday), or discreetly informing the sales representative that staying on an older system or opting for a third-party support provider is an alternative. Expressing a “cloud-first” interest in general can also help – for instance, hint that you’re evaluating which cloud platform (not only SAP’s) delivers the best value. The more SAP fears losing the opportunity, the more they will sharpen their pencil on discounts.
- Ask for Bundled Incentives: Don’t just focus on the percentage discount – also consider value-added benefits that effectively reduce costs. Ask SAP what else they can include or credit to make the proposal more attractive. For example, if you’re moving to the cloud or RISE, see if they will provide migration credits (money or credits you can use for implementation or to offset remaining depreciation on your old licenses). Other incentives could be free extra months of service, training credits, SAP Business Technology Platform (BTP) usage credits, or even SAP support services bundled in at no additional cost. These incentives can sometimes equate to tens of percent of value, effectively raising the “discount” you’re getting without SAP having to formally cut the price further. Always explore the menu of incentives: “We need more than just a 15% discount – can SAP throw in some migration support or BTP credits to bridge the gap?”
- Negotiate Price Protections and Caps: A common mistake is to focus solely on upfront discounts and overlook the long-term costs. Ensure your negotiation includes safeguards, such as price protections. For on-premise deals, try to cap the annual maintenance fee growth (e.g., negotiate that maintenance increases no more than 3% per year, or even hold it flat for a couple of years). For cloud subscriptions, negotiate the renewal terms now: if you received a 20% discount for the first term, will that same discount apply on renewal, or will you face a potential increase in cost later? If you’re locking in a multi-year deal, aim to fix the subscription rate for that period or have a clear cap on any increases. Getting a big first-year discount isn’t a victory if year 2 skyrockets in price. Also, clarify any metrics – for instance, if your cloud price is based on usage or users, ensure it’s clear how adding users will be priced (ideally with the same discounted rate). Negotiating these terms upfront can protect the effective discount over the life of the contract.
- Use Phased Rollouts and Flexible Terms: Another tactic to improve the deal is to structure it in phases or with flexibility. Maybe you’re not ready to deploy everything on day one – why pay full price from day one? Negotiate a ramp-up schedule where you pay less in year 1 (for lower usage) and it increases as you roll out more broadly. This can often justify a higher discount now because SAP sees you committing to growth. Similarly, consider flexibility clauses: can you have the ability to swap one product for another of equal value if your needs change? Or adjust user counts annually without penalty? These might not directly change the headline discount, but they increase the value you get and help you avoid over-spending on licenses or subscriptions you won’t use immediately. Bringing creative deal structuring ideas to the table can prompt SAP to find ways to meet your cost targets without simply saying “no” to a discount request.
Using these tactics in combination can be very effective. For example, let SAP know you’re considering Oracle (competition leverage), ask for a larger discount or a migration credit (incentive), ensure the discount remains in effect for a 3-year term (protection), and structure payments based on the rollout (flexibility).
This multi-pronged approach shows SAP that you’re a savvy customer – and they will often respond by finding a way to make the deal work on your terms, rather than risk losing the business.
Avoiding Discount Illusions
Big discounts can be enticing, but not all that glitters is gold. SAP (like any vendor) might present a deal that looks amazing on the surface, but you need to read between the lines.
Here are some common “discount illusions” and pitfalls to watch out for, so you don’t fall for a deal that isn’t as good as it appears:
- Steep License Discounts vs. Maintenance Costs: You negotiated a 60% discount on your license purchase – fantastic! But check what happens with the maintenance fees. SAP’s standard maintenance is 22% of the license list price or net price (it’s typically 22% of net, but always verify your contract). If maintenance is calculated based on the discounted net price, that’s great – you benefit in the long term. However, ensure SAP isn’t quietly basing maintenance on a higher pre-discount value or planning to increase the maintenance percentage later. Also, be cautious of deals where SAP offers a substantial initial license discount but then includes clauses that increase maintenance or support fees significantly in subsequent years. A rock-bottom license price doesn’t help if you get locked into skyrocketing annual support costs. Always negotiate maintenance rate caps and confirm the base for those calculations.
- Cloud Renewals and Hidden Metrics: In cloud subscription deals, a common pitfall to avoid is the “introductory rate” trap. Perhaps SAP offered you 25% off for the first year or term, but is that discount guaranteed when you renew? Obtain written confirmation of renewal pricing. Additionally, ensure you fully understand the usage metrics. For example, if your contract is based on, say, 1,000 users or a certain amount of resources, what if you exceed that? Extra usage might be charged at the list price if not negotiated upfront. Hidden metrics, such as data storage, API calls, or indirect access, can lead to unforeseen charges. Ensure that all elements of the cloud service are clearly defined and either fixed in price or discounted, so your savings don’t evaporate with overage fees later.
- One-Time Credits vs. Recurring Value: SAP may offer a lucrative one-time credit or incentive (such as a substantial upfront discount on a single component or complimentary services for the first year) that initially makes the deal appear attractive. But consider the full contract term. If you receive a significant credit in year 1 but then have to pay full price in years 2 and 3, calculate the total cost of ownership over the period. It may turn out that the average discount over three years is not that special. For instance, RISE deals might include a one-time credit to offset migration costs – which is helpful – but after that, the subscription could be at a relatively modest discount. The key is to validate whether incentives are one-time or ongoing. Push for benefits that last (e.g., a discount that applies every year, or credits that renew annually if possible). If it’s a one-time cost, factor that in when comparing to benchmarks and negotiating – perhaps you can negotiate a slightly smaller one-time giveback in exchange for a slightly lower recurring price, which could save you more in the long run.
- Bundled Shelfware: Sometimes a vendor might include extra software or modules in a deal “at no additional cost” to inflate the apparent discount. Be cautious of agreeing to a bundle where you won’t use some of the components. Those extras could be considered shelfware – even if they were free, you might end up paying maintenance on them, or they might complicate your contract. Also, bundling can obscure the true price of each item. Insist on transparency: know the unit prices and discounts of each element. A high discount on a bundle might hide the fact that one important element is barely discounted. Ensure that the products you need the most are the ones receiving the deepest cuts, not just the throw-ins.
In short, always inspect the deal holistically. A 50% discount with bad terms can be worse than a 40% discount with excellent terms.
Don’t be mesmerized by a big number on the quote without checking the fine print and the future implications. Negotiate with the total value in mind, not just the initial price.
Six Practical Recommendations for CIOs & Sourcing Leads
To wrap up, here are six actionable recommendations to help CIOs, procurement leads, and IT sourcing managers secure benchmark-level SAP discounts and negotiate with confidence:
- Use Benchmark Ranges as Your Anchor: Before negotiations, determine the benchmark discount range for your deal type (on-prem, cloud, RISE, etc.) and anchor your expectations around the high end of those benchmarks. For example, if you know 50% is an average discount others get, start your ask higher (say 60%) and use 50% as the minimum you’re willing to accept. Having this data-backed stance sets the tone that you’re informed and won’t settle for less than a fair deal.
- Include Discount Goals in RFPs/RFQs: When soliciting quotes or proposals (whether from SAP or SAP partners), be upfront about your commercial expectations. It can be as direct as stating in an RFP document, “We are looking for proposals that reflect pricing in line with industry-standard SAP discount benchmarks (e.g., ~50% off license list).” By formalizing your discount goals in writing, you signal to SAP that they need to come to the table with a competitive offer from the start. It also helps avoid the anchoring effect of a weak initial quote.
- Time Your Negotiations Strategically: Plan your buying cycle around SAP’s calendar when possible. Ideally, engage when SAP has an incentive to cut a deal, such as at the end of Q4 or their fiscal year, or even at the end of the month if it’s a tight quarter. Let SAP’s sales urgency work in your favor. This doesn’t mean you wait until the last day (that can be risky), but start discussions with enough runway and aim to finalize as the deadline pressure mounts on their side.
- Get the Discount and Terms in Writing: Verbal promises or informal emails about discounts are not enough. When you reach an agreement, ensure the final contract explicitly documents the discount level and any related protections. For example, if you negotiated a 50% discount on the list price for certain licenses, the contract should specify both the list price and the net price, as well as the discount percentage. If you arranged a price hold for two years or capped maintenance increases, those need to be written in. Having it in the contract prevents any “misunderstandings” later and ensures you receive the negotiated deal throughout its term.
- Engage Independent Experts (if possible): Consider bringing in an independent expert in SAP licensing or sourcing, especially for large or complex deals. These consultants or firms specialize in understanding the benchmark SAP pricing and negotiation tactics that are effective. They can provide an unbiased review of SAP’s proposal, identify hidden issues, and even handle parts of the negotiation for you. Their fee can often be a small fraction of the savings they help secure. Even if you don’t hire someone, at least consult with peers or user group communities for an outside perspective, don’t negotiate in a vacuum.
- Conduct a Post-Deal Review: After the contract is signed and the dust settles, do a retrospective. Compare the outcome to your initial targets and any new benchmark information that becomes available. Document what went well and what could be improved. This practice helps your organization build a knowledge base for future negotiations. Over time, you’ll refine your approach and perhaps uncover even better SAP discount negotiation strategies. Plus, if any part of the deal didn’t go as hoped (say you didn’t get the desired discount on a certain component), you’ll be ready to address it in the next true-up, renewal, or purchase – armed with even more insight.
By following these recommendations, you institutionalize a savvy approach to SAP procurement that consistently aims for (and achieves) better-than-average results.
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