Your CRM renewal is in 30 days. The email says your rate is increasing 8%. “Market adjustments.”

Most companies just pay it. They’re busy. They don’t realize negotiation is expected.

Here’s how to do it right.

The Renewal Calendar

First, know what’s coming. Most SMBs have no idea when their contracts renew until the invoice arrives.

Create a renewal calendar:

• Software name
• Current annual cost
• Renewal date
• Notice period required for cancellation
• Primary contact at vendor

Set reminders 60-90 days before renewal. That’s your negotiation window.

Why Vendors Will Negotiate

Vendor economics favor keeping you over finding new customers. Customer acquisition is expensive. Retention is profitable.

This gives you leverage.

If you threaten to leave, they’ll often:

• Reduce price to match competitors
• Add months free
• Upgrade your tier at no cost
• Remove price increases

They’d rather discount than lose you.

Before You Negotiate

Know Your Usage

How many seats do you actually use? What features do you actually use?

If you’re on a 25-seat license using 18 seats, you should downgrade. If you’re on Enterprise but only use Standard features, you should downgrade.

Come to negotiation knowing exactly what you need.

Research Alternatives

What would it cost to switch to a competitor? Get actual quotes.

Even if you don’t plan to switch, having competitor pricing gives you leverage. “Competitor X quoted us 20% less for similar functionality.”

Calculate Your Switching Cost

How painful would switching actually be? If it’s extremely painful, you have less leverage. If it’s easy, you have more.

Be honest with yourself. Bluffing about switching when you can’t actually switch doesn’t work.

Identify Your Negotiation Points

What do you actually want?

• Lower price?
• More seats at same price?
• Tier upgrade at current price?
• Contract flexibility (annual vs multi-year)?
• Better payment terms?

Know your priorities.

The Negotiation Conversation

Start Early

Contact your account manager 60-90 days before renewal. “We’re reviewing our software stack and want to discuss our renewal.”

Starting early signals you’re serious. It gives time for back-and-forth.

Lead with Value Conversation

Don’t start with “we want a discount.” Start with:

“We’ve been a customer for X years. We want to continue, but we need to make sure the investment makes sense.”

This frames it as a business discussion, not a haggling session.

Present Your Position

“We’ve audited our usage. We’re using X seats but paying for Y. We’ve seen pricing from competitors that’s Z% lower. What can you do to make renewal make sense?”

Be specific. Data is more persuasive than vague complaints.

Ask for What You Want

Be direct about what you’re asking for.

“We’d like to renew at last year’s rate with no increase.”

“We’d like to reduce seats from 25 to 20 and keep the same total cost.”

“We’d like to upgrade to Professional tier at our current Standard pricing.”

Specific asks get specific responses.

Be Willing to Walk Away

This is the hardest part. You need to genuinely consider alternatives and be willing to switch.

If the vendor senses you’re bluffing, negotiation weakens. If they sense you’re genuinely evaluating options, they’ll work harder to keep you.

Get Multiple Offers

“Let me talk to my leadership team about this offer. Can you also send an option that’s [alternative structure]?”

Having options helps you and gives vendor flexibility to find something that works.

Specific Tactics That Work

The Competitor Quote

“We’ve been quoted $X by [competitor]. We prefer your platform, but that’s a significant difference. Can you match or get close?”

This works especially well if the competitor is a credible option.

The Budget Freeze

“Our budget for this category is fixed at $X this year. That’s what we can spend. How do we make this work?”

Finance constraints are understandable. Vendors would rather discount than lose the deal to a budget issue.

The Multi-Year Trade

“We’d consider a 2-year deal if the pricing was right. What would that look like?”

Vendors love multi-year deals (guaranteed revenue). They’ll often discount 10-20% for commitment.

The Usage Correction

“We’ve been paying for 30 seats but only using 20. We need to right-size this to 20 seats.”

This is just asking for what you should be paying. Vendors will resist but often accept reduced seat counts.

The Upgrade Ask

“We’re choosing between renewing at our current tier and upgrading to the next tier. If you can offer us the upgrade at our current price, we’ll commit.”

Sometimes you get more for the same money rather than paying less for the same thing.

What to Watch For

Auto-Renewal Traps

Many contracts auto-renew with price increases. Check your contract terms. Some require 30-90 days notice to cancel. Miss that window and you’re locked in.

Hidden Price Increase Clauses

Contracts may allow annual increases of “up to X%.” Know what’s in your agreement.

Implementation Penalties

Some vendors charge for reducing seats or downgrading mid-contract. Check before assuming you can adjust.

Verbal vs Written

Whatever you negotiate, get it in writing. Email confirmation at minimum. Updated contract ideally.

When You Have Less Leverage

You have less leverage when:

• You just implemented (switching now would waste the investment)
• The product is highly customized (switching is expensive)
• There are few competitors (less choice)
• You’re in the middle of a critical period (can’t afford disruption)

In these cases, focus on smaller wins: payment timing, tier adjustments, added features rather than major price reductions.

When You Have More Leverage

You have more leverage when:

• Contract is ending (you could easily not renew)
• You’re underusing what you pay for (obviously overpaying)
• Strong competitors exist (real alternatives)
• The vendor’s industry is struggling (they need revenue)
• You’re a reference customer (they value your logo)

Use this leverage appropriately.

The Realistic Outcome

Don’t expect 50% discounts. Vendors have margins they protect.

Realistic wins:

• Matching last year’s pricing (avoiding increases)
• 10-20% reduction for multi-year commitment
• 5-15% reduction with competitive pressure
• Right-sizing to actual usage
• Tier upgrades at current pricing

These add up. On a $50,000 annual software spend, 10% saved is $5,000. Every year.

Make It a Practice

Don’t just negotiate reactively when renewals arrive.

• Maintain the renewal calendar
• Review quarterly: what’s coming in the next 90 days?
• Build relationships with vendor account managers
• Document what you negotiated each year

Ongoing attention to vendor costs is part of managing your tech stack. It saves money year after year.