Benchmarking SAP Discounts for Enterprise Buyers

Benchmarking SAP Discounts: Is Your SAP Deal Competitive?

CIOs and CTOs negotiating SAP contracts need to know if the discounts they receive are truly competitive. Benchmarking SAP discounts against industry standards helps gauge whether your SAP discount percentage aligns with those achieved by similar enterprises.

In short, understanding typical SAP discount ranges and using those benchmarks in negotiations can save millions and ensure you’re not overpaying for software licenses or subscriptions.

SAP Pricing and Discounts

SAP software comes with published list prices, but almost no enterprise pays those sticker prices. In practice, negotiated discounts off the list price are standard.

SAP’s business model often expects customers to negotiate; the initial quote might include a modest discount, but savvy CIOs know there’s usually room for more.

For on-premise licenses, SAP also charges annual maintenance (typically ~22% of the net license cost per year), so securing a deeper upfront discount not only reduces the license fee but also lowers the ongoing support fees calculated on that net price.

Real-world context: If SAP quotes $5 million at list price for a suite of software, a 40% discount would bring it down to $3 million. That $2M saving isn’t just a one-time win – it means maintenance is charged on $3M instead of $5M, resulting in hundreds of thousands of dollars in annual savings in support.

Clearly, the deeper your discount, the better your long-term Total Cost of Ownership (TCO). This is why understanding SAP’s pricing structure and typical discount levels is critical before you sign.

Read Bundling SAP Modules for Licensing Discounts.

Why Benchmark Your SAP Discount?

Benchmarking means comparing your deal’s discount percentage to what other companies of similar size or in similar industries have achieved.

CIOs and CTOs should benchmark SAP discounts for several reasons:

• Ensure You’re Not Overpaying: If peers are getting 50% off and you only got 20%, you may be paying far more than necessary. Benchmarks act as a reality check on SAP’s offers.
• Strengthen Negotiation Position: Showing SAP that you know the “going rate” empowers you to push back. For example, “Companies our size typically see a 55% discount on this product” is a powerful statement when negotiating.
• Justify Decisions Internally: Having industry benchmark data helps IT leaders justify tough negotiation stances to CFOs or procurement by demonstrating what’s achievable.
• Identify Opportunities for Savings: Benchmarking may reveal that you left money on the table in a past deal – an insight you can use to renegotiate at renewal or when purchasing additional licenses. Many enterprises have discovered potential savings of 10–30% by benchmarking and realizing their deals weren’t as competitive as they could be.

Not benchmarking is like negotiating in the dark. Without knowing the market norms, you risk either overpaying or accepting terms that others routinely improve upon.

Given SAP’s complex licensing and high stakes, CIOs should treat peer pricing intelligence as a must-have input into any major SAP negotiation.

Typical SAP Discount Benchmarks

How big of a discount is “normal” for an SAP deal? It varies, but industry benchmarks provide ballpark ranges:

• On-Premise Software Licenses: For traditional perpetual licenses (like SAP S/4HANA or ECC user licenses), discounts of 40%–60% off the list price are common in competitive situations. In large, strategic deals (for example, a global enterprise standardizing on SAP), discounts can reach 70–80% off the list. It’s rare for big enterprises to pay anything close to list price. A mid-sized deal might settle around 30–40% off if not aggressively negotiated, whereas a well-informed Fortune 500 company might insist on 60% or more off.
• Cloud Subscriptions (RISE with SAP or SaaS): Discounts on cloud services tend to be lower in percentage terms, partly because the pricing is subscription-based over time. Many organizations can achieve a 10%–30% reduction in their initial cloud subscription quotes through negotiation. However, larger subscriptions or multi-year commitments can increase this discount, up to ~50% off in some multi-year RISE deals where the customer bundles multiple services or time the deal at year-end. Cloud discounts often come in the form of credits or free extensions, rather than just a lower sticker price.
• Maintenance & Support Fees: Annual support (for on-prem licenses) is usually a fixed percentage (standard 22% for Enterprise Support). SAP typically doesn’t “discount” this rate. Still, you can negotiate caps on annual maintenance increases (e.g., no more than 3 3% rise per year) or even secure a temporary maintenance fee holiday for new purchases. Essentially, your “discount” on support is achieved by locking the rate or base value. Ensure that your maintenance is charged on the discounted license price (net price) – it usually is, but verify that SAP isn’t calculating support on a higher pre-discount value.
• Special Programs: In certain programs, discounts can be unusually steep. For example, SAP’s Digital Access Adoption Program (DAAP), designed to address indirect access licensing, offered customers up to 90% off the list price for document licenses to encourage them to opt in. These cases are exceptions aimed at specific goals (like driving cloud adoption or compliance), but they show that SAP can go extremely high on discounts when incentivized. Don’t expect 90% off on your entire ERP deal, but be aware that such discounts do exist in certain instances.

Below is a summary table of benchmark ranges:

Use these ranges as benchmarks: if your negotiated discount falls significantly below these typical ranges, it’s a red flag that your deal might not be competitive.

For instance, if you only receive 25% off an on-premises license purchase, whereas many peers receive 50%, you have grounds to push SAP harder (or engage an expert to help).

Conversely, if you’re in the upper end (say 70% off a large deal), you know you drove a hard bargain – just double-check there are no hidden trade-offs (like unfavorable contract terms or excessive shelfware bundled in).

Factors Influencing SAP Discount Rates

Not all deals are created equal. Several factors will influence how much of a discount SAP is willing to give your organization:

• Deal Size (Volume): Larger deals (in dollar value or user count) almost always command higher discounts. SAP’s price list features volume tiers, and a deal worth $10M at list is more likely to receive a discount of 60% or more than a $500k purchase. Bundle purchases together to increase leverage – negotiating a single, comprehensive agreement often yields a better rate than negotiating multiple smaller ones.
• Timing (Quarter/Year-End): SAP sales teams have quotas and deadlines. As quarter-end or fiscal year-end (December 31 for SAP) approaches, the pressure to close deals can translate into last-minute discount boosts. Timing your negotiation to coincide with SAP’s end-of-quarter push can yield an additional 5–15% discount that wouldn’t be available earlier in the year.
• Strategic Value to SAP: If your company operates in a highly sought-after industry or is a potential reference customer, SAP may offer exceptional terms. First-of-a-kind deals, high-visibility customer logos, or competitive wins over Oracle or Microsoft can drive SAP to grant above-market discounts to land or retain the business.
• Competition and Alternatives: Let SAP know you’re not captive. If you’re evaluating other solutions or considering delaying the project, SAP will feel pressure to sweeten the deal. Even if SAP is the chosen vendor, creating the perception of competition (for example, evaluating a Salesforce or Oracle alternative, or considering third-party support) can spur SAP to improve pricing to secure your commitment.
• Existing Investments: Customers already heavily invested in SAP (with large annual spends on maintenance or multiple SAP products) have leverage to negotiate better discounts on expansions or new cloud transitions. SAP will want to keep and grow such customers, so use your installed base as a bargaining chip (e.g., “We’re paying $2M/year in maintenance – we need an aggressive discount on this new purchase as a show of partnership”).
• Contract Length and Commitments: Committing to multi-year agreements or larger future purchase volumes can unlock higher discounts. For instance, agreeing to a three-year subscription term (vs. one year) or signing a global enterprise agreement with phased rollouts can persuade SAP to give a more substantial upfront discount and possibly lock in pricing for future needs. Just be cautious: only commit to what you truly intend to use, to avoid shelfware.

By understanding these factors, CIOs can assess what a realistic discount target is for their situation.

A small new SAP customer won’t get 70% off like a Fortune 100 company, but that small customer might still achieve 30–40% with smart timing and competition.

Benchmark within your peer group – compare to companies of similar size, geography, and deal scope.

Leveraging Benchmark Data in Negotiations

Knowing the benchmark is one thing; using it effectively is another.

Here’s how to put that knowledge to work in your SAP negotiations:

• Set an Anchor and Goal: Before talks with SAP, decide on a target discount based on benchmarks. For example, if industry data indicates that 50% is the average for your deal type, start by setting a goal above that (say 60%) as an aggressive target. By anchoring high (with justification from benchmarks), you give yourself room to negotiate down to your true target.
• Cite Industry Examples (Tactfully): It can be powerful to reference what other companies have achieved, without divulging confidential info. You might say, “Our understanding from the market is that similar companies have gotten around a 55–60% discount on S/4HANA. We expect a competitive proposal in that range.” This signals to the SAP rep that you’re educated on the market. Be polite but firm, as you are familiar with the landscape.
• Use Third-Party Advisors or Data: Consider leveraging independent licensing consultants or benchmarking services. They often have anonymized data on recent SAP deals. Bringing an advisor’s report to the table (or even just mentioning that you engaged one) can encourage SAP to close the gap to those benchmark levels. SAP reps know that advisors track their discounting patterns, and this transparency can motivate them to avoid looking uncompetitive.
• Real-World Success: As a case in point, one global manufacturer orchestrated its negotiation to coincide with SAP’s fiscal year-end and came prepared with quotes from a competitor (Oracle) and internal benchmark data. SAP’s initial offer of ~35% off grew to 60% off by mid-December once the account team realized the customer was willing to walk away or delay. SAP also included a 3-year cap on maintenance fees to secure the deal before the quarter ended. This example shows how leveraging timing and benchmark knowledge compelled SAP to markedly improve its offer.
• Focus on Total Value, Not Just Percentage: Sometimes SAP may resist a high discount but offer other concessions, such as extra licenses, extended payment terms, or service credits. Weigh these against the pure discount percentage. Your goal is a competitive package. However, be cautious with “free” extras that add shelfware; a high discount on unneeded products isn’t true savings. Always bring the conversation back to “This percentage off is what our benchmarks indicate as fair”.
• Document and Lock-In Benefits: When you do secure a favorable discount or term, get it in writing. For example, if SAP agrees to match a benchmark by offering 50% off and capping support increases at 3% annually, ensure the contract explicitly states the 50% discount (along with the list price reference) and the maintenance cap clause. Benchmark data can also guide what to include in the contract – e.g., if many customers receive a price hold for two years, you can request the same.

In essence, benchmark data is leveraged. It provides an external standard to validate your demands. SAP negotiators often claim “this is the best we can do” – having evidence to the contrary gives you grounds to push back.

Just be sure your data is relevant and recent (SAP’s pricing environment can change with new offerings and sales incentives).

With solid benchmarks in hand, you transform the negotiation from a shot in the dark to a more scientific process grounded in market reality.

Recommendations

• Do Your Homework: Before any SAP negotiation, research typical discount levels for the products you’re buying. Leverage peer benchmarks from user groups, consultants, or past deals to define a target discount.
• Insist on Percentage Transparency: Ask SAP to express all offers in terms of “% off list price.” This makes it easy to compare to benchmarks and ensures you’re tracking true discount levels.
• Aim High (Realistically): Set an ambitious but attainable discount goal based on industry data. Don’t hesitate to ask for a better discount than the benchmark – you can always settle a bit lower, but if you start low, you’ll end up low.
• Time Your Deal: Whenever possible, align purchases or renewals with SAP’s end-of-quarter or year-end. Vendors, including SAP, often offer additional discounts or incentives during these peak periods to help meet targets. Plan your procurement calendar strategically.
• Leverage Competition: Even if you’re committed to SAP, create competitive tension. Get a quote from an alternative or remind SAP you have options (including postponing the project). Competition and the option to say “no” are your best friends in driving deeper discounts.
• Don’t Neglect Terms: A great discount can be undermined by poor contract terms. Negotiate maintenance caps, renewal price protections, and flexibility to adjust license counts as needed. Benchmark contract terms (like price increase caps or swap rights) just as you benchmark pricing.
• Utilize Expert Assistance for Large Deals: For major enterprise agreements, consider engaging an expert in SAP license negotiations or a specialized firm. They bring data on what “good” looks like in the market and can often obtain concessions you might miss. Their fee is usually justified by the savings and protections they secure.
• Benchmark Continuously: Treat SAP discount benchmarking as an ongoing practice, not a one-time task. Markets evolve – for example, as SAP pushes cloud, cloud discounts might improve. Stay informed via industry forums or advisors so you’re ready with up-to-date figures at each renewal cycle.
• Document Every Agreement: When you negotiate a strong discount or special term, document it in the contract and keep a record. Ensure that future teams (procurement, vendor management) are aware that, for instance, “we have a 55% discount on these licenses locked in,” so that it becomes the floor for any new purchase of that product.
• Think Long-Term: A competitive SAP deal isn’t just about the Year 1 price. Benchmark and negotiate with the full lifecycle in mind, including maintenance over 5+ years or subscription renewals. A slightly smaller Year 1 discount might be acceptable if you secure a cap on renewal rates, which could result in savings over the long run. Aim for the best overall economic outcome, not just the flashiest initial discount.

FAQ

Q1: Our SAP sales rep offered a 25% discount off the list price – is that a good discount?
A1: It depends on the context. For a small deal, 25% might be average, but for a multi-million-dollar deal, it’s low. Industry benchmarks show large enterprises routinely getting 40–60% off (or more). You should gauge against similar deals: if peers get 50% and you’re offered 25%, that’s a sign to negotiate harder. Don’t be afraid to politely push back and cite that you’ve seen higher discounts in comparable situations. Often, the first offer is just a starting point.

Q2: How can we obtain benchmark data on SAP discounts without violating confidentiality?
A2: There are a few ways. Engage with independent SAP licensing advisory firms – they aggregate anonymous data and can tell you typical discount ranges for deals like yours. You can also use CIO networks or user groups (like ASUG or SUGEN) to share experiences in general terms. Analyst firms (Gartner, Forrester) often publish research on software pricing trends. None of these require naming specific company discounts; they give you anonymized figures to work with. The key is to use reliable sources and reference ranges (e.g., “upper quartile discount for this product is ~55% off list”) during negotiations.

Q3: Is it realistic to get 70–80% off an SAP software purchase?
A3: For a normal deal, 70%+ off list is on the very high end but not unheard of in certain cases. Huge global deals or situations where SAP is competing fiercely against a competitor have resulted in discounts of that range. However, if your purchase is moderate in size, expecting 80% off might be unrealistic. Aim for a competitive discount based on your deal size – typically 40–50% for a mid-sized project, with higher discounts available in special circumstances. Always ask (you won’t get what you don’t ask for), but also be prepared that SAP will only go as low as is justified by the business case and pressure on their side. Use benchmarks to inform your ask and to know what might be possible.

Q4: We’re moving to RISE with SAP (cloud). Are discount benchmarks different for cloud vs on-prem?
A4: Yes, cloud subscription discounts tend to be lower in percentage terms than on-prem license discounts. A 15–30% discount on a RISE subscription might be a solid achievement, whereas that percentage off an on-prem deal would be considered mediocre. This is because with subscriptions, SAP is often giving you value over time (and they protect their recurring revenue). That said, you can still negotiate RISE aggressively: multi-year commitments, bundling additional cloud services, and timing at year-end can push RISE discounts higher (some large customers have secured discounts of ~40–50% off initial quotes by thoroughly working the process). Be sure to also negotiate aspects like renewal caps in a cloud deal, as the initial discount won’t be significant if the price increases later.

Q5: What if SAP refuses to match a benchmark or claims our requested discount is too high?
A5: This is where your leverage comes in. If SAP says they can’t go further, you should assess your alternatives. Are you willing to delay the project? Can you escalate to SAP management with justification? One tactic is to engage your SAP account executive’s boss or even SAP’s “Office of the CEO” with a well-prepared case showing why your ask is fair (including benchmark data). Another leverage point is considering third-party maintenance or postponing expansion – if SAP senses they might lose revenue entirely, they often become more flexible. Also, ensure you’re negotiating the entire package; although SAP may not be willing to drop the price further, they might add extra licenses or services to increase the value. Suppose all else fails and you truly believe you’re being overcharged. In that case, you may want to explore phased adoption (buying less now to see if better terms become available later) or consider alternative solutions. However, in most cases, if you present solid reasoning and remain a tough yet collaborative negotiator, SAP will likely improve the deal rather than lose it, especially if you have benchmark data to support your stance.

Read about our SAP Contract Negotiation Service.

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