Negotiating Annual Maintenance Caps in SAP Contracts

Negotiating Annual Maintenance Caps in SAP Contracts: Securing Fixed or Capped Support Increases

Annual maintenance fees for SAP software can escalate every year, putting unexpected strain on IT budgets.

CIOs and CTOs should proactively negotiate fixed or capped support fee increases in their SAP contracts to ensure predictable support costs and achieve significant long-term savings.

The Challenge of Rising SAP Maintenance Fees

SAP typically charges a hefty annual maintenance fee (often around 20–22% of your software license value) for support and updates. This fee increases over time, historically by about 3% per year, and recently even more due to inflation.

In 2023, for example, SAP implemented a 3.3% support fee hike (its first increase in nearly a decade), and in 2024, it announced a cap of up to 5% increase tied to local inflation rates.

For a large enterprise paying $5 million a year in SAP support, a 5% annual uptick means roughly an extra $250,000 in costs each year, compounding over time.

Uncapped, these cumulative increases can far outpace IT budget growth and bite into funds for innovation. This growing pressure is motivating CIOs to seek ways to contain support costs.

Read Rightsizing SAP Support Levels to Optimize Cost and SLA Coverage.

What Are Annual Maintenance Caps?

An annual maintenance cap is a contract clause that limits the annual increase in SAP’s support fees. Instead of accepting open-ended or unpredictable yearly hikes, you negotiate a fixed limit (or even a freeze) on those increases.

For instance, you might agree that your SAP support fees will not increase by more than 2% per year, or negotiate a flat fee (with no increase) for a set period. Some customers even secure a fee freeze for the first 2–3 years of a new contract.

In essence, a cap limits the vendor’s ability to raise maintenance charges, protecting you from steep inflationary adjustments.

It’s about making future costs predictable: you know that if you’re paying $1 million this year, next year it might be $1.02 M (2% cap) but not $1.05 M (5% or more).

Caps can be applied to traditional on-premise support agreements and even to multi-year SaaS subscriptions (where they limit price increases at renewal).

The key is that the cap or fixed rate must be written into your contract – verbal assurances won’t help when the next increase notice arrives.

Why Negotiate Fixed or Capped Support Increases?

Securing a fixed or capped increase on SAP maintenance offers several important benefits:

• Budget Predictability: CIOs can forecast support costs accurately for years. No more surprises from an unexpectedly high adjustment – crucial for long-term IT financial planning.
• Cost Savings: Even a small percentage difference has a big impact at enterprise scale. Capping increases at, say, 2% instead of a possible 5% can save millions over a typical 5-year span. Money not spent on support hikes can be reinvested in new projects or innovations.
• Protection Against Inflation: In volatile economic periods, SAP may invoke contract clauses to raise fees in line with inflation or consumer price indices. A cap shields your organization from the full brunt of those economic spikes by limiting the increase to a maximum agreed upon.
• Leverage in Negotiations: Pushing for a cap signals to SAP that you are cost-conscious and willing to negotiate every aspect of the deal. It sets a precedent that pricing will be challenged, often leading SAP to reconsider its proposals for large increases or to offer concessions elsewhere.
• Alignment with Value Received: Many customers feel that maintenance value doesn’t increase simply because SAP’s costs have decreased. A cap ensures you’re not paying significantly more each year if the level of support and updates you receive remains relatively steady. In other words, it helps align costs to the value and usage you get from SAP support.

In summary, negotiating a maintenance cap is about avoiding the “automatic tax” on your SAP investment.

It forces both you and the vendor to plan for support costs in a fair and controlled manner, rather than letting fees balloon without restraint.

Cost Impact: Uncapped vs. Capped Maintenance Fees

To appreciate the value of a cap, consider a simple 5-year scenario. Company A pays $2 million in SAP support fees in Year 1, and the contract allows SAP to raise this amount by 3% annually.

Company B is similar, but it negotiates a cap limiting increases to 2% per year.

In contrast, Company C manages to negotiate a complete freeze for the first three years (0% increase), followed by a 3% increase thereafter. The difference in costs adds up quickly:

Over five years, Company B would save approximately $220,000 compared to Company A by using a 2% cap instead of a 3% cap. Company C (with a multi-year freeze) saves about $440,000 in that period.

These savings grow even larger if SAP were otherwise raising fees by the 5% per year now seen in some contracts – the cap protects you from those compounding increases.

Projected SAP support fee increases over 5 years (assuming a $2 M starting annual fee) with no cap vs. a 2% cap and a 3-year freeze. Even modest reductions in the allowed increase (from 3% to 2%, or negotiating a temporary 0% freeze) yield significant savings over time.

Beyond raw savings, having a cap also means fewer budget fights with Finance each year.

CIOs won’t need to go hat-in-hand asking for a larger support allocation beyond what was expected. The value of predictability and goodwill internally can be as important as the hard dollars saved.

Strategies for Negotiating Maintenance Caps

Negotiating a cap on SAP support requires careful preparation, strategic timing, and effective leverage.

Here are proven strategies to achieve a fixed or capped maintenance clause:

• Negotiate at the Right Time: The optimal moment to secure maintenance terms is during a new purchase or a major renewal. SAP is most flexible when it’s closing a large license deal or subscription agreement. Take advantage of year-end or quarter-end pressure on SAP’s sales teams – they have targets to hit. For example, some savvy customers time big negotiations for Q4, when SAP is eager to book revenue, and they’ve won concessions, such as a 3-year maintenance fee freeze, as part of the deal. Use SAP’s urgency to your benefit.
• Bundle it with Your Ask: Make the maintenance cap part of a larger negotiation package. If you’re signing a significant S/4HANA upgrade, expansion, or multi-year cloud agreement, explicitly include support fee protections in your list of deal requirements. You might say, “We’ll commit to this purchase, but only if our support costs stay flat for X years or never rise beyond Y%.” Tying the cap to a strategic investment makes it harder for SAP to refuse, since they want the bigger sale. In one real-world example, a global manufacturer secured a three-year hold on support fees by bundling this request with a multimillion-dollar S/4HANA contract – this saved them millions and sealed the deal for SAP.
• Use Benchmarks and Peers: Do your homework and come armed with benchmark data. If you are aware that similar enterprises have negotiated 2% caps or a no-increase period, please mention it. SAP reps respond when you demonstrate knowledge of market norms: e.g., “Many customers in our industry are getting no more than 2% annual support increases. We expect the same.” This indicates that you understand what constitutes a fair deal. User groups and independent advisors can provide valuable insights into what others have achieved in terms of maintenance.
• Leverage Your Landscape and Alternatives: Remind SAP that you have alternatives. If appropriate, suggest considering third-party support providers or evaluating SaaS competitors, which could help eliminate or reduce your SAP support expenses. You don’t need to overtly threaten, but a gentle mention – “We have to consider all options to control costs, including third-party support” – can encourage SAP to be more accommodating on maintenance caps. The possibility of losing your support revenue entirely often motivates SAP to find a compromise, such as a lower cap or a temporary freeze, to keep you on board.
• Remove Shelfware Ahead of Time: Optimize Your License Footprint Before Negotiating Support Terms. Identify any unused SAP licenses or modules (“shelfware”) that you’re paying maintenance on unnecessarily. Where possible, negotiate to terminate or swap out unused licenses during the renewal so they no longer incur maintenance fees. A smaller maintenance base means future percentage increases hurt less in absolute dollars, and it shows SAP you’re serious about not wasting money. SAP won’t readily let you drop licenses, citing “install base preservation” policies. Still, if you present a plan (for example, trading those unused licenses for some new software or cloud credits), you can often cut that dead weight. In practice, some companies have freed up hundreds of thousands in annual fees by cutting shelfware before applying a cap on the remaining spend.
• Ask for Specific Contract Language: Don’t settle for vague promises. Ensure the contract explicitly states the cap or fixed rate. For example, include wording like: “Maintenance fees shall not increase by more than 2% per year for the next 5 years,” or “Support fees will remain at $X annually for the initial term of 3 years.” If you negotiate a special deal (like a one-time waiver or freeze), make sure it’s documented in the contract or support addendum. This prevents misunderstandings later and ensures continuity in the event of personnel changes (your SAP account manager might not be around in two years, but your contract clause will remain in effect).
• Be Willing to Compromise: Recognize that SAP may push back on a cap because it limits their future revenue potential. Be prepared to trade something of value to get it. This might mean committing to a longer contract duration, agreeing to a cloud transition timeline, or consolidating purchases. For instance, you could extend your support contract term from 1 year to 3 years in exchange for a guarantee of 0% increase during that period. From SAP’s view, they get certainty you’ll stay as a customer; from your view, you get cost certainty. It’s a classic win-win if structured properly. Just be cautious about overcommitting – ensure you have an out clause or at least performance criteria if you lock in a long-term.
• Escalate if Necessary: If your initial request for a cap is met with resistance (“Our policy is standard for all customers,” “We can’t possibly do that”), don’t give up. Engage higher management on both sides. Have your CFO or CIO reiterate to SAP’s sales leadership how critical predictable maintenance costs are to your company. When SAP knows this issue can make or break the deal (and that your C-suite is watching it closely), they often find creative ways to accommodate – perhaps a “one-time exception” or a private letter agreement. The phrase “non-negotiable” tends to soften when a multi-million-dollar contract is on the line.

By employing these strategies, many enterprises have successfully secured maintenance caps or freezes.

The overarching principle is to treat maintenance not as an afterthought, but as a core part of the deal value. You are paying for support year after year – negotiate it with the same rigor as you do the upfront license price.

Dealing with SAP’s Pushback

It’s common for SAP’s negotiators to initially push back on requests for fixed or capped support fees.

You might hear statements like “Our support pricing is standard and not discountable” or “We only adjust by CPI, which is fair.”

Here’s how to address common pushbacks:

• “Nobody Else Gets This” – In reality, many large customers do negotiate maintenance protections. You can respectfully cite examples (without naming companies) of others who have caps. SAP knows peers talk at user group events. Make it clear that your company expects treatment comparable to other major clients.
• “Policy Tied to CPI/Inflation” – Acknowledge that you understand inflation is real, but position your ask around shared risk. For instance, propose a compromise: if inflation stays low, no increase; if it spikes, cap it at a modest level. Emphasize that your company needs cost stability to continue investing in SAP’s products; otherwise, you’ll have to divert funds to cover maintenance.
• “We Can Offer a One-Time Credit Instead” – Sometimes, if SAP won’t budge on the formal clause, they might offer a workaround like a credit or discount elsewhere. Evaluate these carefully. A one-time support credit (e.g., a free month of support) is nice but fleeting, whereas a cap yields ongoing savings. Try to steer the discussion back to the contract clause, which is more valuable in the long term. If you do accept credits, ensure they genuinely compensate for the expected increases you’re foregoing, and still push for partial protection in wording if you can.
• “Our Costs Are Increasing Too” – SAP may justify increases by citing their rising costs (development, support staff, etc.). While that may be true, remind them that customer loyalty and continued spend should count for something. If you’ve been a customer for 10+ years, you’ve likely paid far more in maintenance cumulatively than in license fees. It’s reasonable for you to ask for a fair and sustainable arrangement. Position it as a partnership: “Help us keep our costs predictable, and we can plan for expanding our SAP footprint confidently.”
• “No” (Final Refusal) – If SAP refuses to include any cap or freeze, you need to weigh your options. One approach is to negotiate a shorter contract term or an opt-out: if you can’t get a cap, don’t lock into a long-term agreement that leaves you exposed. Another approach is to intensify the evaluation of alternatives – engaging seriously with third-party support providers or exploring whether moving some workloads off SAP could result in cost savings. Inform SAP of these evaluations. Even after a deal is signed, remember that you can revisit the conversation at the next renewal. Conditions change, especially if enough customers push back. Keep the pressure on: even if you didn’t get the cap this time, SAP will recognize it as a top concern, and you’ll likely bring it up again, which could influence their pricing behavior in the interim.

Throughout, maintain a professional but firm tone. You want a good relationship with SAP, but that relationship must respect your business requirements.

Most SAP account teams, when pressed constructively, will work with you to find a middle ground because they ultimately want to retain your business for the long haul.

Recommendations

• Make Maintenance Caps Non-Negotiable on Your Side: Enter every major SAP negotiation with a clear mandate that support fee increases must be capped or fixed. Treat it as a required term, not a nice-to-have.
• Negotiate During New Deals or Renewals: Leverage the peak of your buying power, such as new license purchases, S/4HANA migrations, or cloud commitments, to incorporate maintenance protections. SAP is far more flexible when closing a sale.
• Insist on Contractual Clarity: Get the exact cap (%) or freeze period written into the contract. Vague assurances are not enough; ensure the agreement language explicitly limits annual support fee increases.
• Cap Early Years or Initial Term: Aim to freeze maintenance fees for the first couple of years of any new agreement or at least cap them at an ultra-low rate (0–2%). Early relief provides immediate budget benefit and sets the tone for future terms.
• Use Third-Party Quotes as Leverage: Even if you prefer to stay with SAP support, obtaining a quote from a third-party support provider can strengthen your hand. Let SAP know you have options on the table to avoid excessive fees.
• Optimize License Footprint: Before renewing support, eliminate unused licenses and components. Reducing your maintenance base means any increase (even with a cap) applies to a smaller number, directly cutting costs.
• Time Your Ask Strategically: Align your negotiations with SAP’s financial calendar. Year-end negotiations can yield better results (e.g., SAP may agree to a cap or freeze in December to close a deal that can be booked that year).
• Consider Multi-Year Commitments: If you’re confident in SAP’s long-term viability, offer a longer subscription or support term in exchange for a price lock. For instance, commit to 5 years if SAP guarantees no more than a 1% annual increase or a flat rate for that period.
• Stay Informed and Engage Peers: Keep in touch with SAP user groups and industry analysts. Knowing the latest trends (like SAP’s 2024 move to 5% caps) and peer benchmarks empowers you to negotiate from a position of knowledge and strength.
• Prepare a Fallback Plan: In case SAP won’t agree to your cap, have a plan B. This could involve setting aside a budget for a possible increase, or, more drastically, planning a pilot with a third-party support firm. Showing that you’re ready to act if an agreement isn’t reached can often prompt SAP to return to the table with a compromise.

FAQ

Q1: What exactly does a “maintenance cap” clause look like in an SAP contract?
A: It’s typically a sentence in the pricing or support terms stating the maximum percentage that SAP can increase your annual support fee each year (or each renewal period). For example: “Support fees shall not increase by more than 2% per year during the term of this agreement.” In some cases, it may reference an index (such as the CPI) with a ceiling, e.g., “CPI, capped at 3%.” The key is that a clear number or formula is limiting the increase. Without such language, SAP’s standard terms might allow increases at their discretion (with some notice).

Q2: Why would SAP ever agree to cap or freeze maintenance increases?
A: SAP agrees when it’s necessary to close a deal or retain a customer’s business. If you’re making a large purchase, moving to S/4HANA, or even considering leaving SAP support, that gives you leverage. SAP values long-term relationships and revenue predictability – they’d rather collect a bit less increase than lose the support business entirely. Also, competition (from third-party support or rival software vendors) pressures SAP to be more flexible. In short, if SAP’s convinced that giving a cap is what it takes to sign the contract or keep you happy, they often will find a way to do it (especially for strategic customers).

Q3: When is the best time to bring up a support fee cap in negotiations?
A: Early in the negotiation, and especially when you have the most leverage. Ideally, introduce it when discussing the overall commercial terms of a new deal or renewal – don’t wait until after talking pricing and discounts to mention the cap as an afterthought. For example, when you outline your requirements (licenses, services, etc.), include “maintenance increase capped at X%” on that list. Late in the process, SAP might claim it’s too late or they assumed standard terms. By raising it early and making it a condition of doing business, you signal that it’s a priority. Also, aim for periods when SAP is eager to close (year-end, quarter-end, or before a major internal target), as mentioned – they’ll be more receptive then.

Q4: Our SAP contract is mid-term, and we’ve started seeing 3% annual increases. Can we negotiate a cap now, or should we wait until the renewal?
A: Your best opportunity to change terms is typically at renewal or when purchasing a new one. Mid-term changes are tough – the contract is already in force and likely allows those increases. However, it’s not impossible if you have reason to renegotiate (e.g., you’re about to make a significant additional purchase, or you’re considering an S/4HANA migration). In such cases, you can approach SAP to amend the contract as part of a broader deal. Outside of that, if maintenance increases are hitting you hard mid-term, you can still have a conversation with SAP – express your concerns and see if they’ll voluntarily defer or reduce an increase for a period. There have been instances where, due to economic conditions (such as during the COVID-19 pandemic), SAP has postponed increases for all customers. Nothing stops you from asking for relief, but you’ll have the strongest position when the contract is up for renewal and SAP wants your signature again.

Q5: We’re on SAP Standard Support (not Enterprise Support) at about 18–20%. Does that change our ability to cap increases?
A: Not really – the ability to cap increases applies to any support tier. SAP Standard Support historically had lower percentage fees, but SAP has been moving many clients toward Enterprise Support (22%) and aligning policies. Regardless of the tier, your contract will include language regarding adjustments after the initial term. You should negotiate caps for Standard or Enterprise support just as you would for any other support level. If you’re on Standard Support and SAP is trying to migrate you to Enterprise Support, that’s a perfect time to insist on no increases during the switch or a very low cap going forward. The support tier primarily affects the base percentage and service level, rather than whether you can limit annual adjustments.

Q6: If we negotiate a maintenance fee freeze for a few years, will SAP still provide full support during that time?
A: Yes – if you’re paying for support (even at a fixed rate), you continue to get the full support services you’re entitled to. A fee freeze doesn’t mean a service freeze; it simply means the price won’t increase for that period. SAP isn’t going to reduce your support level just because you negotiated a better price term. You’ll still receive patches, updates, and helpdesk support as usual. (Just be sure you remain compliant with the contract terms and pay the agreed fee on time – the cap/freeze deal can be voided if you breach the contract.)

Q7: What’s the typical cap customers secure – is asking for a 0% increase realistic?
A: Many customers aim for 2-3% caps if SAP initially requests something like 5%. A 0% increase (true freeze) for the entire term is more challenging to get, except perhaps for a short period or initial year or two. However, it’s not unheard of: some large deals have included no increase for the first 2-3 years. For example, a company might obtain a clause that maintains the flat rate for three years, after which any increases are capped at 3%. Think of 0% as the ideal to strive for in early years, and a low single-digit cap as a reasonable compromise for later years. Always ask – the worst SAP can say is no, and sometimes you’ll be surprised with a yes. If SAP flat-out won’t do 0%, see if they’ll do a one-year freeze, then small caps. The exact number often depends on your leverage and deal size: a larger customer spend equals more negotiating power to secure a lower cap.

Q8: How do SAP’s recent inflation-based increases affect negotiations?
A: SAP’s move to tie support increases to inflation (CPI) with a ceiling (3.3%, then 5%) is setting their default cap from their side. It gives you a reference point. In negotiations, you can acknowledge that “SAP is using 5% CPI-based caps now” and then push for better: maybe a fixed 3% cap, or even a guaranteed flat rate for a few years, since 5% may be far above actual inflation in some years. In other words, SAP has implicitly admitted that caps are reasonable (they put one in their standard terms). Use that to say, “We need more predictability than 5%. Let’s agree on 2% max, since we both expect inflation to normalize.” It’s harder for SAP to argue against caps when they already apply them broadly – you’re just haggling over the number. Additionally, if inflation drops, ensure your contract specifies “CPI or X%, whichever is lower,” so you benefit from low inflation and are protected when it’s high.

Q9: What alternatives do we have if SAP’s support becomes too expensive despite negotiations?
A: There are a couple of alternatives:

• Third-Party Support: Companies like Rimini Street offer support for SAP products at roughly 50% of SAP’s maintenance fee. By switching, you could cut costs dramatically. The trade-off is you won’t get new SAP upgrades or innovations (they’ll support your existing system as-is), and returning to SAP support later can be costly (potential back-maintenance fees). Some organizations use this as a temporary “maintenance holiday” to save money for a few years.
• Rightsizing or Reducing Scope: If certain SAP systems are non-critical or can be retired, you may reduce your SAP footprint and, consequently, your maintenance costs. This is usually a longer-term strategy (retire legacy systems, migrate some functions to cheaper platforms).
• Cloud Migration Deals: Moving to SAP’s cloud (like RISE with SAP) converts maintenance into a subscription cost. Sometimes, SAP will bundle incentives, for example, by including support in the subscription or providing credits. Be cautious: subscriptions have their own escalators, so you still need caps in those deals. But a cloud transition could reset how you pay for support.
  Ultimately, mentioning or exploring these options can also be a negotiation tactic. SAP would rather retain you as a maintenance customer than see you switch to third-party support or scale back your use. If they know you’re serious about alternatives, it can motivate a better offer on maintenance terms.

Q10: How can we ensure our maintenance cap deal stays in place if our SAP account manager changes or SAP policy shifts?
A: The only guarantee is to get it in writing in the contract. That way, even if your account manager or SAP’s policies change, the agreement clause remains enforceable. Ensure the cap applies for the duration you expect (e.g., until a specific year or through the contract term and any renewals). It’s also wise to keep records of all communications and the final signed contract accessible. Upon renewal time, bring up that clause early so SAP remembers you have a protected rate. Internally, make sure your procurement and contract management teams are aware of the cap so they can catch any errors – if SAP sends an invoice that violates the cap, you’ll need to flag it and invoke the contract. In short, a well-documented contract clause and vigilant contract management on your side will keep that hard-won maintenance cap working for you.

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