How to Get a Fair Deal with ServiceNow
Published on 09 Mar 2021
ServiceNow is a premium ERP solution. A common belief is that in order to get premium solutions businesses have to shell out whatever cost ServiceNow dictates. It is true that quality solutions are expensive however, this does not mean that costs can't be optimized. With careful planning and by understanding ServiceNow's sales tactics and pricing, businesses can get an optimal price for their licensing. Even a marginal decrease in per-user pricing can lead to significant savings for a business.
Understanding ServiceNow's pricing:
The difference from the closest competitor
BMC’s Helix ITSM (information technology service management) product (previously known as Remedy) is the closest competitor to ServiceNow in the ITSM space. ServiceNow is priced at nearly double the cost of BMC Helix ITSM on a per license basis when compared to the average unit price achieved by their respective customers. Despite the cost premium, ServiceNow still dominates the ITSM market.
Confidence in renewal
Not many customers that acquire ServiceNow end up switching solutions.
ServiceNow’s customer renewal rate is 98%, illustrating how few buyers elect to
move off the SaaS platform. Since it’s likely that you will have ServiceNow for years
to come, it’s important that competitive pricing is achieved early in your relationship.
Margin per license sold
There are minimal internal costs for ServiceNow associated with licensing additional users. As a result, ServiceNow can achieve very high gross margins on the products sold. The amount of profit that is made on every license sale provides flexibility for ServiceNow to offer aggressive discounts while still maintaining positive net incomes.
See Also: How to get a fair deal with Salesforce
Service now sales tactics:
1. Module bundling
ServiceNow bundles its product modules into suites to obscure price transparency. Each individual module provides specific functionalities that customers use. Customers must purchase additional full suites if extra licenses are needed for any of the included modules. Since the pricing for individual modules is not known, businesses do not have leverage if they only need a particular module and not an entire suite.
2. Product changes
ServiceNow frequently changes its product sets and module functionality. This creates the opportunity for them to also change pricing. Aside from your product functionality changing, the discount you worked so hard to achieve could be undone by one of ServiceNow’s product changes or updates. ServiceNow uses product changes to charge premiums to clients so that they can get the same level of functionality they were already receiving.
With 10 years of deal-making experience and advice from experts in the field, ClearEdge has the knowledge required to get the best deals even from giant vendors like ServiceNow. By optimizing cost businesses can save money and get the most bang for their buck. Download this white paper by Clear Edge to learn more about ServiceNow's tactics and what you can do to guard against them.
