SAP License Renewal: How to Save Costs

1. Audit Your SAP Usage and Eliminate Shelfware

Before discussing any SAP license renewal, thoroughly audit your current usage. Companies routinely discover they are paying for licences that no one uses — a phenomenon known as shelfware. Identifying and removing shelfware is the single fastest way to reduce costs at renewal. For a comprehensive primer on SAP licence categories, see our SAP Licensing Guide for ITAM Practitioners.

Inventory All Users and Modules

Run SAP's licence measurement reports (USMM and LAW) to get a clear picture of active users and usage of each software component. This reveals whether you have more named user licences or module capacity than you actually need. Compare the output against your contract entitlements — many organisations are surprised to find they are entitled to more (or less) than they realised.

Identify and Remove Unused Licences

Look for employees who have left or changed roles and no longer log into SAP, as well as any modules or add-ons that were purchased but never fully implemented. These idle licences continue to accrue annual support fees until they are formally removed. For user licences, deactivate or reallocate them to others if possible. For completely unused products, plan to terminate those licences or negotiate their removal at renewal. This halts the ongoing maintenance "tax" on shelfware. See our guide on SAP Licensing Cost Drivers and Optimisation for a detailed breakdown of every cost element you should audit.

Right-Size Licence Types

Check that each user has the appropriate licence type. You may be paying for expensive Professional user licences for people who only need self-service access. Downgrading to lower tiers — where appropriate — can reduce costs significantly without compromising functionality. For guidance on specific licence categories, see our guides on SAP Professional User Licences, SAP Limited Professional Licences, SAP Employee Self-Service Licences, and SAP Worker User Licences.

Cost Impact of Shelfware

The table below illustrates how maintenance on unused licences accumulates over time, often exceeding the original licence cost:

Paying 22% yearly support means an unused $1M licence costs $1.1M in fees over 5 years. Eliminating such shelfware before your SAP licence renewal directly translates into immediate and compounding savings.

2. Start Early and Plan Your Renewal Strategy

A successful SAP license renewal that saves costs begins long before the contract's end date. Top enterprises treat renewals as a structured project, starting 6–12 months in advance to set objectives and line up negotiation leverage. For a detailed timeline and planning framework, see our guide on Planning Your SAP Licence Renewal: Timeline, Checklist, and Best Practices.

Define Future Needs

Project your SAP requirements for the next 3–5 years. Will you need additional users or new modules? Are you planning a move to SAP S/4HANA or new cloud services? Knowing this upfront prevents overbuying "just in case" and lets you negotiate for only what you truly need — with options to grow later.

Engage Stakeholders Early

Form a cross-functional team — IT, procurement, finance, and legal — to review current contracts and usage. Align on goals: reducing cost by a specific percentage, dropping obsolete components, or securing new capabilities within the same budget. A united internal stance ensures you won't be divided by sales tactics.

Research and Benchmark

Gather intelligence on SAP's pricing trends and peer benchmarks. Understand typical discount levels for customers of your size and spend — large enterprises often secure 50% or more off the list price on new licences. If possible, obtain quotes from alternative solutions or third-party support providers discreetly. Knowing that a third-party can support SAP for half the maintenance cost, or that a competitor's software is cheaper, gives you credible leverage. For a deeper look at third-party support, see our guide on Third-Party Support for SAP ECC After End of Support.

Time the Conversation

Inform SAP's account team that you are evaluating renewal options — ideally 6+ months in advance. Obtaining an initial quote early reveals SAP's opening offer and leaves ample time to negotiate. Vendors are more flexible when they know you're planning ahead, and if your renewal coincides with SAP's quarter or year-end, their eagerness to close deals can work to your advantage.

3. Negotiate for Discounts and Flexible Terms

At the negotiation table, every aspect of the SAP renewal is negotiable — not just price, but also contract terms that lock in future savings. Approach the renewal as an opportunity to realign your contract with current needs and budget constraints. For a comprehensive playbook, see our SAP Contract Negotiation Playbook.

Aim for Significant Discounts

Don't accept SAP's first offer. It is common to negotiate substantial discounts on licence purchases, especially when expanding your footprint or adopting new products. Enter discussions with a target discount in mind — for example, "we need at least 30–50% off list" — and back your ask with data from past deals or industry benchmarks. SAP expects savvy customers to negotiate, and even a modest discount increase can translate to millions saved on a large renewal.

Bundle and Trade Off

Leverage any planned new investments as bargaining chips. If you are considering purchasing additional SAP modules or cloud services, use that as leverage to negotiate better pricing on the renewal as a whole. Conversely, if you have unused licences from earlier deals, consider trading them in for credit towards what you need now. SAP may not refund money, but they often apply the value of unused software towards new products — especially if you show willingness to explore their cloud offerings.

Lock In Future Protections

Secure terms that safeguard against future cost increases: price holds (fixed pricing for additional licences for a few years, allowing you to grow without incurring full list price later), and caps on maintenance fee increases. Try to restrict annual support hikes to a maximum of CPI or a fixed percentage. Additionally, negotiate flexibility to swap licence types or transfer licences to a new SAP product (such as S/4HANA) without hefty penalties — this provides agility as your business evolves.

Contract Length and Commitments

Determine the right contract duration. A longer commitment might fetch a bigger discount, but avoid locking in terms that are too rigid. Ensure you have an exit strategy or checkpoints. If you agree to a multi-year subscription or cloud deal, clarify the renewal options at the end of the term to prevent sudden cost increases. Ask for renewal price caps or the ability to adjust user counts periodically in line with actual usage.

4. Factor In ECC vs. S/4HANA and Cloud Options

Your SAP roadmap — especially any transition from legacy SAP ECC to SAP S/4HANA or cloud services — should directly inform your renewal strategy. SAP licence renewals are a prime time to reassess your platform and potentially save costs by taking advantage of SAP's incentive programmes. For a detailed guide on S/4HANA licensing, see our SAP S/4HANA Licensing: Complete Guide.

Evaluate Conversion Programmes

If you are still on SAP ECC and plan to move to S/4HANA, discuss SAP's licence conversion options. SAP often allows customers to convert existing ECC licences to S/4HANA licences at no additional licence cost, as you have already paid for the software. However, the devil is in the details — maintenance fees after conversion may change. Negotiate how your support costs will be recalculated to avoid an unexpected cost increase. A well-negotiated conversion can enable you to adopt S/4HANA without a significant increase in annual fees. For migration-specific advice, see our SAP S/4HANA Migration Licensing Guide for CIOs and CTOs.

Consider RISE or Cloud Subscriptions Carefully

SAP is heavily promoting "RISE with SAP" and other cloud subscription models. These can simplify costs (one subscription fee instead of separate licence + maintenance), but they can also be pricier over the long term if not negotiated well. Use the renewal opportunity to compare scenarios: continuing on-premises (with rising maintenance costs) vs. moving to a cloud subscription. SAP may offer significant discounts or cloud credits. Ensure any cloud deal includes price protections after the initial term so you don't face a steep renewal uplift in 3–5 years. See our analysis on RISE with SAP Negotiations: Breaking Down the Hidden Costs.

Mind the ECC Support Deadline

SAP's mainstream support for ECC lasts until 2027 (with optional extended maintenance through 2030 for an extra premium). This looming deadline means if you're renewing an ECC-centric contract, you need a plan. Either negotiate transitional terms (like the right to extend support or flexibility to switch to S/4HANA later), or be prepared to budget for higher support costs after 2027. Some enterprises use this as leverage: SAP might be more willing to cut a deal on S/4HANA licences or a RISE subscription now, rather than risk the customer delaying or exploring other vendors when ECC support ends. For cost-cutting strategies around the 2027 deadline, see our guide on Cutting SAP ECC Maintenance Costs Before 2027.

5. Manage Compliance Risks: Indirect Access and Audits

Unbudgeted costs often arise when SAP finds you are using the software beyond what you have licensed — typically through "indirect access" or through normal organic growth. A proactive stance on compliance during renewal negotiations can save you from nasty surprises. For a comprehensive overview of the pitfalls CIOs face, see our guide on Top 10 SAP Licensing Pitfalls for CIOs.

Assess Indirect Usage

Indirect access refers to third-party systems or external users that interact with SAP data — for example, a Salesforce system reading SAP customer information, or a web portal creating orders in SAP. In the past, SAP charged steep fees if licences didn't cover these scenarios. At renewal, review how your SAP is integrated with other systems. If you have significant indirect data flows, consider SAP's Digital Access licence model, which licences such use by document count rather than requiring a named user for every external interaction. You can negotiate a package of Digital Access licences, often at a discount, to preempt audit claims. For a full explanation, see our SAP Digital Access Licensing: Complete Guide and our comparison of Indirect vs Digital Access Models.

True Up on Your Terms

If your usage has grown (more users, higher transaction volumes, etc.), you may technically need to "true up" and buy additional licences. Rather than waiting for SAP to catch this in an audit, address it during renewal discussions. By coming forward proactively, you can fold the needed extra licences into the deal — often at a far better price than if purchased reactively. For instance, if a merger increased your employee count by 10%, negotiate those extra user licences now under the renewal discount, instead of paying full price after an audit.

Negotiate Audit Clauses

Review the audit and compliance terms in your SAP contract carefully. While no vendor will drop their audit rights entirely, you can seek reasonable limits — for example, at most one audit per year with 90 days' notice — and a clear dispute resolution process. If indirect access is a concern, push for clarity in the contract about what constitutes chargeable use. The more you clarify in writing, the less leverage SAP has to present an unexpected bill later.

Leverage Compliance Resolutions for Savings

Sometimes SAP will offer to waive or reduce back-licence fees for any compliance shortfall if you commit to a new purchase or upgrade. If an audit has revealed gaps, use the renewal to negotiate a settlement as part of the new contract — for example, SAP forgiving certain fees in exchange for a modest increase in your licence volume or a migration to a new product. Turn a potential compliance cost into a structured, predictable agreement. For more on how SAP's Digital Access Adoption Programme works, see our guide on the SAP DAAP: How to Evaluate, Negotiate, and Avoid Cost Traps.

6. Control Maintenance and Support Costs

Annual support fees (maintenance) often make up the largest portion of SAP's cost of ownership — and these fees tend to rise over time. Effective maintenance management is crucial for saving money in both the short and long term.

Remove What You Don't Need

As emphasised earlier, cutting shelfware is the most direct way to lower maintenance spend. SAP typically charges 20–22% of the licence price every year for support. If you cannot fully terminate unused licences, explore whether SAP will allow you to reduce your support scope. While SAP's policy is usually all-or-nothing, large customers have in some cases negotiated one-time reductions or carved out a separate contract for unused components to drop them from support.

Negotiate Maintenance Rate and Escalation

Don't overlook the support line item in your renewal. If you are on Standard Support (~22% of licence cost) or Enterprise Support (slightly higher), those percentages may be negotiable for a large deal. For example, one company managed to cap its maintenance fee at 19% by signalling it might switch to a third-party support provider. Additionally, insist on a cap for year-over-year maintenance increases — SAP has moved to index-linking support fees to inflation (with up to ~5% annual hikes). Try to lock in a lower ceiling or even a flat maintenance fee for a few years to protect your budget.

Consider Third-Party Support (Carefully)

If SAP won't budge on maintenance and you have a stable environment, third-party support firms offer a way to cut support costs by 50% or more. This can be an interim solution, especially for organisations delaying an S/4HANA migration. However, be cautious: leaving SAP support means no new updates or fixes from SAP, and rejoining later can be costly (SAP may charge back-dated fees to reinstate support). If you entertain this route, use it as a negotiation lever — "We have this cheaper support option on the table" — and, if you proceed, try to negotiate terms with SAP for an easier return in the future. For a detailed analysis, see our guide on Third-Party Support for SAP ECC After End of Support.

Optimise Support Level

Ensure you are not overpaying for support tiers you don't need. Some older ECC contracts might still be on basic Standard Support (slightly cheaper), while others are on Enterprise Support by default. If your contract moved you to a higher support level without clear benefit, attempt to negotiate staying on the lower tier. Also check if you are paying maintenance on outdated products you plan to retire soon — timing their decommission can avoid renewing support on them needlessly.

7. Expert Tips to Save on SAP Renewals (10 Recommendations)

1. Perform an Internal Licence Audit. Before engaging SAP, thoroughly audit your licence usage. Use SAP's tools or third-party analyses to map actual usage vs. entitlements — this uncovers immediate savings opportunities and ensures you know your compliance position.
2. Clean Up and Reallocate Licences. Proactively clear out inactive user accounts and unused modules. Reassign licences where possible to avoid new purchases. Enter negotiations with a clean baseline so you only renew what is truly needed.
3. Start Renewal Talks Early. Give yourself at least 6–12 months of lead time. Early engagement enables you to set the agenda, obtain initial quotes, and refine offers. Rushed last-minute renewals almost always favour the vendor.
4. Align With Future Strategy. Integrate your SAP roadmap into the renewal. If S/4HANA or cloud is on the horizon, leverage SAP's desire for you to adopt it — push for incentives, credits, or contract terms that support your transition without extra cost.
5. Benchmark and Set Targets. Know what discount and terms you should aim for by learning from industry peers and past deals. Set an internal target (e.g., "at least 40% off licences, maintenance capped at 2% increase") and negotiate towards it.
6. Negotiate Beyond Price. Don't focus only on the upfront price — also negotiate contract flexibility: the ability to swap licences, adjust volumes, and secure favourable audit terms. These nuances prevent costly surprises in the future.
7. Use Leverage Wisely. If you have alternatives — whether a competitor's product for part of your landscape or the possibility of third-party support — use that leverage. Just signalling that you have options puts pressure on SAP to make a better offer.
8. Document Everything. Ensure all negotiated concessions are written into the contract or renewal order form. Verbal promises from sales reps about "we'll take care of you on extra licences" are worthless. Lock in discounts, credits, and protections formally.
9. Consider Expert Help. SAP licensing is complex. Don't hesitate to involve a specialised SAP licensing advisor or legal counsel to review the renewal. They can often identify hidden risks or additional savings that busy internal teams might miss.
10. Stay Firm but Relationship-Focused. Be assertive in pursuing cost savings but maintain a respectful partnership tone with SAP. Showing that you mean business on costs while remaining collaborative leads to the best long-term outcomes.

8. Checklist: 5 Actions for Your Next SAP Renewal

9. FAQs