“Eight out of ten companies are drastically overcharged by Salesforce.”
Kelly is a former FBI agent, a licensed private investigator, a litigator, an MBA, and a global thought leader and advisory board member with a focus on technology.
He has made a career of tracking down all the ways in which major software platforms like Salesforce, Oracle, and Microsoft abuse their customers financially by overcharging and trapping them in contracts that penalize them for operating according to normal business practices. He helps clients escape these abusive practices and save between 20-50% on their technology spend.
We caught up with him recently to find out just exactly how it is that Salesforce is overcharging and abusing its customers, and what companies can do about it.
“Fundamentally, people are looking to save money,” says Kelly.
He says that nine out of ten new customers come to The Salesforce Negotiator from either referrals or people simply doing a Google search.
“We’ve got 4,000 people a month reading our article on understanding how Salesforce negotiates,” he says. “So that’s been a key to our success.”
The vast majority of the companies that engage with TNG want to know if they’re “getting screwed” on their licensing costs. Kelly says customers already know that most SaaS pricing, especially at the enterprise level, is basically made up out of thin air, depending on what the market will bear, and they want to know if they can do better.
Kelly built and trademarked a process for helping these companies, called “right sizing and right pricing.”
“The vast majority of the market doesn’t understand that there are different types of licenses,” says Kelly, referring to the practice of offering different license types depending on the user’s role and needs. He says that most Salesforce customers have too many licenses of the wrong types, and can save substantially by downsizing the types of licenses they pay for.
He says that one of the biggest weaknesses within companies that pay for SaaS licenses is that they don’t map their users to identify who needs what permissions and access. This results in excessive “shelfware”–software capabilities that are never used.
Right pricing is making sure you’re not overpaying for the licenses you do have.
Kelly’s company has benchmarking data that helps companies understand very quickly whether they are paying too much for their software licenses. He says 9/10 companies that come to him are.
“Sometimes by as much as 70%, other times as low as 10%,” he says. “Across the whole spectrum, we usually save customers 20-40%. We only work with them if there’s at least a 10% opportunity.”
I have talked before about how expensive Salesforce is, and how predatory their pricing and contracts can be. But I was surprised to learn just how extreme the problem is.
Kelly says that Salesforce has a deliberately complex and overly complicated sales and contract negotiation process that makes it very difficult for the average purchaser to understand exactly what they’re signing. Then they build in “gotcha” clauses and other costly features that deliberately trap customers into paying more than they should.
One of the ways that Salesforce does this is with restricted use licenses. These licenses permit only a certain business use. The contract is written so that the company is prohibited from using the licenses for any other use. The customer company is responsible for instituting internal controls to prevent unauthorized use of these licenses, but most do not, and most don’t even know they need to. This then becomes an audit risk.
When Salesforce finds these “unauthorized” uses during an audit, it becomes the responsibility of the customer to prove that they were not deliberately abusing the license. If they cannot definitively prove their innocence, then they are responsible to pay the retail price for the license, backdated from the point of failure.
This price difference can be “staggering.”
“For example,” says Kelly, “the difference between $25 a month and $350 a month, multiplied across 2,000 licenses over 36 months.”
How common is this scenario?
Other ways that Salesforce deliberately traps customers into paying too much is by offering “discounts” on additional licenses when the customer agrees up front to add them at specific points in time. This usually results in “shelfware” because the customer doesn’t end up using those licenses but is locked into paying for them anyway.
Kelly says the “discounts” that are offered can always be obtained at a later date, and recommends that companies never agree to purchase more licenses than they currently need.
Kelly’s companies work primarily with enterprise level clients rather than SMB. However, he says that SMBs are often victims of the same and other predatory practices by Salesforce.
For example, Salesforce is extremely aggressive with sending companies to collections, putting liens on assets, and otherwise coming after clients with extreme force when they attempt to downsize or otherwise renegotiate parts of their contracts to reflect new realities.
Kelly’s advice is to bring appropriate advisory support with you to your initial contract negotiations with Salesforce. At the start of the contract is the best time to ensure your contract is fair and “right sized, right priced,” though late is still better than never.
If you don’t have advisory support, then scrutinize your contract carefully. Salesforce builds in clauses and requirements that are designed to cost you dearly. They like to get you to commit to a forced ramp-up schedule, they sometimes build in automatic price increases, and they will rarely help you “right size” your licenses.
“The best thing is to start small and slow,” says Kelly. “Even if they are offering a discount, that discount can always be achieved later.”
Of course, our suggested solution is to skip Salesforce altogether and purchase a software platform that is designed to help you, not just to generate profits for shareholders. At Membrain, our pricing structure is transparent, our contracts are straightforward, and our goal is always to help you grow.
If you’re already with Salesforce and you’re curious about whether you’re overpaying, TNG offers a free client intake assessment at no cost, which you can access via their website.
Or you can make like Affinitext, and get out.
If you’re not already with Salesforce… why not reach out to us to find out if we can give you more of what you actually need, without the slimy tactics.
George is the founder & CEO of Membrain, the Sales Enablement CRM that makes it easy to execute your sales strategy. A life-long entrepreneur with 20 years of experience in the software space and a passion for sales and marketing. With the life motto "Don't settle for mainstream", he is always looking for new ways to achieve improved business results using innovative software, skills, and processes. George is also the author of the book Stop Killing Deals and the host of the Stop Killing Deals webinar and podcast series.
Find out more about George Brontén on LinkedIn