AWS

AWS EDP Negotiation – A Step-by-Step Guide

AWS EDP Negotiation: A Brief Overview

To negotiate with AWS for an Enterprise Discount Program (EDP), follow these key steps:

  1. Forecast Growth and Usage: Accurately predict your future AWS compute and usage needs.
  2. Understand Workloads and Costs: Calculate the total cost of ownership (TCO) for AWS services under EDP.
  3. Review AWS Marketplace Apps: Ensure your spending on these apps contributes to your committed expenditure.
  4. Maximize Leverage: Use your forecasted AWS needs to negotiate a specific EDP discount tier.
  5. Set Realistic Commitment Thresholds: Optimize targets to avoid extra costs from under or overspending your commitment.

AWS EDP Negotiation – A Step-by-Step-Guide

Understanding AWS EDP:

  • Definition: AWS EDP is a specialized discount program for clients with significant, ongoing AWS spending.
  • Goal: Aims to support customer growth on the cloud with cost-efficient scaling.

Qualifying for AWS EDP:

  • Spending Threshold: Typically requires annual AWS expenditures of over $1 million.
  • Future Commitment: Expected to maintain or increase this spending level in subsequent years.
  • Discount Range: Starting discounts around 6% for $1+ million annual commitments, with variations based on several factors.

This structured approach highlights the AWS EDP’s core aspects, making it easier to understand its purpose, eligibility criteria, and potential benefits.

Preparing for AWS EDP Negotiation

Forecast Growth, Compute, and Usage Demands

Your product and engineering growth plans can dramatically affect AWS costs on various services. Accurately forecasting projected compute and usage demands over the next few years is essential.

Review your past AWS spending and account for factors that may impact future user demands.

Understand Workloads and AWS Costs

Estimate the TCO (total cost of ownership) of AWS services under the EDP program. Compare these costs with your alternatives: multiple vendors? On-prem/hybrid/multi-cloud options?

Review AWS Marketplace Apps

Check the apps your engineering team uses and their availability in the AWS Marketplace.

Spending on AWS Marketplace apps can contribute to your committed expenditure.

Maximize Leverage

Demonstrate the value your business will bring to AWS in terms of a long-term purchase commitment. Use your accurately forecasted AWS cloud needs when negotiating a specific EDP discount tier.

Set Realistic Thresholds

Optimize your EDP targets to avoid additional costs incurred due to underspending or overspending your EDP commitment.

Set your commitment thresholds just below your forecasted usage demands to ensure that you don’t leave money on the table due to the underconsumption of the services.

Understand the Markets

Understand where the markets and your usage trends are headed. How do external factors affect your network traffic and usage demand spikes? What’s the ROI on your business plan to scale AWS EDP commitments?

Consolidate Spending

Check if others in your immediate organization, parent organization, or subsidiary also consume AWS cloud. By consolidating this spend, you may achieve higher discount tiers.

Communicate Your Broader Business Requirements

EDPs can help you achieve broader business outcomes than just cost savings. Let your account or partner manager know what your business is trying to do about go-to-market, training and skills, and product strategy, and see how they can help.

Following these steps, you can strategically approach the contract discussion, improve your negotiation power, and close a deal tailored to your cloud usage demands at a lower TCO.

To negotiate a better discount from AWS, customers should consider these arguments:

  1. Historical and Projected Usage: Present detailed data on your past and future AWS usage.
  2. Business Growth Potential: Demonstrate how your growth aligns with increased AWS usage.
  3. Competitive Options: Mention potential alternatives to AWS, showing a willingness to explore other vendors.
  4. Commitment to AWS Services: Emphasize loyalty and long-term commitment to using AWS.
  5. Volume of Spend: Highlight the total spend and the potential for increasing it with better terms.
  6. Unique Use Cases: Showcase how AWS services are crucial for your business needs.
  7. Strategic Partnerships: Stress the strategic value your business brings to AWS beyond just monetary spending.

AWS EDP Discounting

  1. Reserved Instances: Offers significant discounts over standard pricing for committing to a specific instance type in a region for a fixed term (1 or 3 years).
  2. Savings Plans: Provides lower prices in exchange for a commitment to a consistent amount of usage (measured in $/hour) for a one or 3-year term.
  3. Spot Instances: You can bid for unused EC2 capacity at potentially lower rates.
  4. Volume Discounts: As your usage increases, AWS offers tiered pricing, meaning the more you use, the less you pay per GB.
  5. Custom Negotiations: AWS may offer custom pricing agreements for large-scale users, particularly under the Enterprise Discount Program (EDP). or the new PPTS.

Each discount option accommodates different usage patterns and commitment levels, allowing businesses to optimize their cloud expenditure effectively.

Step-by-step guide to AWS EDP negotiations

  1. Assess Your AWS Usage and Needs: Analyze your current and projected AWS usage. This helps you understand the scale of services you require, which is crucial for negotiating terms that align with your needs.
  2. Understand AWS EDP Criteria and Benefits: Familiarize yourself with AWS EDP requirements and benefits. Knowing these details informs you about potential discounts, and can leverage them in negotiations.
  3. Forecast Future Growth: Predict your company’s growth and its impact on your AWS usage. Accurate forecasting is essential to negotiate a contract accommodating future expansion without incurring unnecessary costs.
  4. Prepare a Negotiation Strategy: Develop a negotiation plan, including renewal terms, desired terms, and pricing. A clear strategy helps present a solid case for AWS, showing that you understand your needs and the value of AWS services to your business.
  5. Engage in Negotiations with AWS Representatives: Initiate discussions with AWS using your prepared strategy. Effective communication during this stage is critical to reaching an agreement that benefits both parties, ensuring cost savings and service efficiency.
  6. Review and Finalize the Contract: Carefully review the proposed terms, ensuring they meet your requirements. Finalizing the contract with a thorough understanding avoids future misunderstandings and sets a clear path for your AWS service usage.

Terms to negotiate in your AWS EDP

When negotiating an AWS EDP (Enterprise Discount Program) contract, consider focusing on the following terms:

  1. Discount Rates: Negotiate the best possible discount rates based on your spending and commitment levels.
  2. Commitment Period: Discuss the contract length to align with your business planning cycles.
  3. Payment Terms: Work out favorable payment terms that suit your financial flow.
  4. Cancellation or Change Terms: Clarify terms for contract modifications or cancellations to maintain flexibility.
  5. Service Level Agreements (SLAs): Ensure SLAs meet your operational requirements and include remedies for service failures.

FAQ

  1. What is AWS EDP?
    • A discount program for customers with high, long-term AWS spending.
  2. How do you qualify for AWS EDP?
    • Typically, spend over $1 million annually on AWS services.
  3. What discounts does AWS EDP offer?
    • Starts at about 6% for $1+ million annual commitments, depending on factors.
  4. How to prepare for AWS EDP negotiation?
    • Forecast growth, understand workloads and costs, and review AWS Marketplace Apps.
  5. What strategies are effective in AWS EDP negotiation?
    • Maximize leverage, set realistic spending thresholds, and understand market trends.
  6. Can you negotiate contract terms in AWS EDP?
    • Yes, focusing on discount rates, commitment periods, and payment terms.
  7. What factors influence AWS EDP discount rates?
    • Your AWS usage, commitment level, and negotiation skills.
  8. What should you communicate to AWS during negotiation?
    • Your business requirements, growth plans, and how AWS supports these goals.

Redress Compliance AWS Negotiation Service

Don’t let cloud costs overwhelm you – let us help you secure the best possible terms with AWS.

Reach out now for a consultation and take the first step towards significant AWS savings!”

What’s Included in Our AWS Negotiation Service:

  1. Customized Negotiation Strategies: Tailored approaches based on your AWS usage and needs.
  2. Cost Analysis and Optimization: In-depth analysis of your current AWS spending to identify savings opportunities.
  3. Contract and Terms Review: Assistance understanding and negotiating AWS contracts for favorable terms.
  4. Long-term Savings Plans: Guidance on selecting and implementing AWS Savings Plans and Reserved Instances.
  5. Ongoing Support and Consultation: Continuous support and advice to adapt to changing AWS costs and usage patterns.

Author

  • Fredrik Filipsson

    Fredrik Filipsson brings two decades of Oracle license management experience, including a nine-year tenure at Oracle and 11 years in Oracle license consulting. His expertise extends across leading IT corporations like IBM, enriching his profile with a broad spectrum of software and cloud projects. Filipsson's proficiency encompasses IBM, SAP, Microsoft, and Salesforce platforms, alongside significant involvement in Microsoft Copilot and AI initiatives, enhancing organizational efficiency.