Technology vendors have increased prices by as much as 30 percent over a twelve month period, according to a new paper from analyst firm Gartner.
Author Jo Ann Rosenberger quotes one application maintenance service provider to be sending “an annual renewal statement of work with an 18 percent increase in the maintenance and support fees,” which is put down to labor shortages that have pushed up the company’s internal staffing costs.
In another example, a SaaS vendor's contract renewal had increased by 21 percent without a clear explanation. Upon investigation, the considerable price increase was attributed to inflation, which the company said it must pass on to its clients.
Inflation blamed for rising costs
In response to these “vague and general answers [which] can in no way serve as sufficient detail to explain or justify the fairness of these unexpected increases,” Rosenberger puts forward a pair of propositions that could help companies to combat increasing prices.
The point of sale can be a particularly busy period in which a lot of information is shared, and this is the perfect opportunity to slip in a few price increases, she explained. Try to slow the process down and digest each piece of information, and take the time to query why the prices have risen. Remember to arm yourself with the latest economic data to help support your case.
Rosenberger says “the executive-level meetings serve as an opportunity to relay the message loud and clear that pricing and cost play a key role in how you will view the vendor relationship going forward.”
The second option, which may not be for everyone, involves waiting until financial incentives are likely to be more common. Periods such as end-of-quarter and end-of-year will require companies to meet targets, and as a result you may be able to get a better deal.
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