Auto-renewals in general offer benefits such as convenience, locked-in prices, and a stable vendor relationship. But this comes at the cost of critical negotiation leverage, the opportunity to right-size your contract, or find a better-suited alternative in a rapidly evolving landscape.

Even in cases where you might not want to switch, there are hidden costs to consider. For instance, if you’re using a product that has a steep onboarding/training curve, your vendor might be including those costs in your yearly price on auto-renewal. But once you’re trained and set up, you don’t need your vendor’s support for the subsequent years, do you?

Building your renewal strategy

You can’t blame vendors for making the most of the ‘don’t fix it if it’s not broken’ mindset that most companies have, to push their auto-renew contracts. And over the years, auto-renewals have become par for the course. But they don’t have to be the only way -- even if you find a SaaS product you want to stick with. Here are a few best practices that could help you:

1. Avoid credit card payments

Auto-renewals mostly rely on charging your credit card. You can avoid this by opting for a Purchase Order process with your vendor.

2. Know your buying options and costs

Given how dynamic the SaaS ecosystem is, you can be sure that there’s a good deal just around the corner. Keep yourself updated on the latest developments and popular alternatives.

However, we understand that this is easier said than done. In SaaS buying, there’s a lot that happens under the hood. It’s almost impossible for you to know if another company got a better deal and why. A lot depends on your ability to negotiate, find critical negotiation levers, or your relationship with your vendor.

Though not a possibility with every vendor, you could look for vendors who allow you to use their services on a month-to-month basis. This way, you can cancel with a notice of fewer than 30 days.

3. Set up a SaaS buying policy

An efficient way to ensure that one-off purchases with auto-renewal clauses are not missed is to have a SaaS policy that clearly outlines the process for SaaS purchases, with a check for an auto-renew check built into the approval process.

Even better, have a centralized SaaS procurement process in place, so you can drive the same policies and processes across teams and departments.

4.  Automate SaaS procurement and contract management

The worry of missing a renewal at the end of the year is a valid one especially given how the average 100-employee company uses up to 100 different SaaS products. The best way to keep track of your contracts and risk a missed renewal or cancellation is to have an automated system to manage SaaS contracts.

If you use a SaaS procurement tool, you’ll easily be able to track every purchase within your organization, as well as when each is set to expire.

Read Also: SaaS Renewal Management: How to Optimize your SaaS Renewals?

5. Negotiate good renewal terms each time

Auto-renew or evergreen clauses don't have to be the default. The last 90-120 days of a contract provide you the most negotiation leverage. It’s a shame to waste it.

If you’re worried about your ability and availability to engage in negotiations each time, SaaS procurement software like Spendflo can handle renegotiations and renewals for you for every software you need to purchase or renew.

Spendflo has a dedicated team of buyers who look at your purchase history, usage requirements, and the current market data from thousands of tools and cumulative million-dollar spends to get you the best deal year on year. It also helps you right-size your contracts and subscriptions, and renegotiate every tool 120 days before its renewal date so you don’t have to worry about dates and due diligence.

Get in touch with us to take your SaaS purchase and renewal strategy to the next level.

Adithiya Namasivayam
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Here's what the average Spendflo user saves annually:
$2 Million
Your potential savings