SAP PRICE OVERVIEW
SAP sells one of the most expensive solutions on the market, commanding a premium over comparable options. We do not deny that SAP is an expensive solution, but that does not mean costs cannot be reduced. In this document we will dive into competitive discounting for SAP products and offer solutions for customers to mitigate SAP pricing risk.
This SAP Pricing report will focus on the following topics:
1. SAP Pricing Statistics
How does SAP price in comparison to their competition? We detail the price premium SAP has over their closest CRM competitor, Microsoft Dynamics, and other pricing statistics such as price variance and gross margin per license sold. This section sets up the document to illustrate how successful SAP is at their pricing strategy, consistently pricing customers at premiums and maximizing their revenue per transaction.
2. SAP Pricing and Discount Percentages
Provided in this section is a detailed table highlighting the average SAP pricing across all major SAP product families. This table provides transparency into the price ranges we have observed over the last year, exemplifying the large range in discounting offered to customers. Though many customers may find themselves in these ranges, this section explains that the best deals include discounting that exceed the highlighted range, and with proper planning and negotiating leverage any customer can improve their SAP price.
3. SAP Pricing Tactics and Risks
SAP uses a number of pricing tactics to ensure they win deals, maximize margin, and increase costs for the customer. This section details three unique SAP tactics used in their licensing model that can present pricing-related risk for customers:
SAP Bundling: SAP commonly bundles proposals to hide necessary pricing details to validate deal competitiveness. This lack of transparency translates to future premiums inflicted on the customer without the need for price justification.
SAP Value-Based Pricing: A common misconception is that SAP prices their products strictly on a volume basis, providing better discounting for the higher volumes purchased. Though there is a correlation with a higher likelihood of achieving competitive discounting at a high volume purchase, we have also observed customers achieve the same level of discounting with very small purchases. This proves that pricing is not dependent on volume, but rather how motivated the sales rep is to price your deal competitively. This section highlights what “value-based” pricing is and how you can achieve competitive SAP discounting regardless of how large your purchase is.
SAP Demand Inflation: Like many suppliers, SAP will try to make you buy more licenses than you need to increase the total cost and maximize commissions. SAP typically assumes all products will be deployed on day one (which is unlikely in most organizations) and ignores current utilization rates of your existing products before proposing additional quantities. This tactic leads customers to purchase quantities based of SAP’s preferred product roadmap.
4. SAP Price Incentives
In the last section of this SAP pricing report, we detail the top three motivators for SAP sales reps. If a customer understands the incentives and compensation plans for a SAP rep, they will have all the tools needed to form a negotiation strategy for the SAP purchase. We dive into how compensation for SAP reps are calculated, applicable bonuses achieved through specific deal scenarios, and which SAP products hold a higher weighted value for a sales rep’s compensation.
To increase your chances of achieving higher SAP discounting and lower costs, this document will aid you in identifying competitive pricing, SAP pricing strategy, and SAP sales rep incentives to facilitate movement on your bottom line. For additional assistance on your SAP purchase, review some of the other ClearEdge resources listed below to help plan your strategy and mitigate risk.