As more companies decide to use cloud-based solutions to meet their needs, the usage of cloud services is increasing. Forecasts indicate that by 2026, the cloud computing market will be valued at $947.3 billion.

The cloud service sector is fiercely competitive, with numerous suppliers fighting for customers’ business. But it is precisely because of this competition that businesses can negotiate for more favorable terms on goods and services. 

Learning how to negotiate with cloud service providers ensures that businesses get the best deal possible and prevents them from overspending on services they do not require.

Here are the important tips about negotiating with the cloud service provider to maximize your benefits and achieve your goals.

1. Understanding what your cloud needs are

Before engaging in negotiations with a cloud service provider, you must have a clear understanding of your business objectives and what you need from them. You should also have a budget in mind as well as expectations for the quality of service you require.

Knowing what you need can help you negotiate alternative service options and avoid overspending on services that are either unnecessary or don’t bring value. When you are clear about what you need, you can negotiate with greater assurance and make more direct demands.

2. Do your research for different pricing model

Depending on the kind of services you require, cloud service providers usually offer a variety of price options, including pay-as-you-go, reserved instances, and combos of the two. Understanding how these pricing systems function is key to getting better offers.

• Pay-as-You-Go: This flexible model allows you to pay for services only when you use them, but if it is not managed well, it can end up costing more over time.
• Reserved Items: This paradigm requires a longer time commitment to use certain resources (like processing power or storage), like one or three years. This solution is an excellent alternative for firms with predictable workloads because it frequently comes with large reductions.

3. Define the Terms of Data Ownership

Data ownership is another important negotiation tactic. Make sure the contract expressly states that you are the owner of the data. If you choose to end the contract, try to work out a way to get the ability to get your data back in a format that can be used. 

If that is not possible, most cloud service providers have data export features that let you manually export, store locally, and create a backup of your data.

• Make sure you have access to your data during the contract time in case the vendor exercises their right to terminate the agreement or there is a breach of contract. 
• It’s advisable to devise a strategy for obtaining your data if the business declares bankruptcy or is abruptly acquired or divested.
• Last but not least, make sure the contract has a transition time that lets you transfer your data to a different cloud service provider in case you decide not to renew it.

4. Negotiate SLA and enhanced support plan

Service-level agreements (SLAs) and support are essential to sustaining dependable cloud operations. The level of support you receive from a cloud service provider can have a big impact on how you feel about them.

• Improve Your SLA Negotiations

SLAs specify the anticipated degree of service performance and availability. Providers typically offer tier-based SLAs, wherein higher uptime guarantees are associated with a higher cost. Nevertheless, depending on your unique business requirements, you might bargain for better conditions. 

For example, if your company depends on uninterrupted service, you could wish to bargain for increased uptime guarantees or quicker service interruption reaction times.

• Request Enhanced Support Plans

Cloud service providers give a range of support packages, from specialized account managers to simple email assistance. Make sure to incorporate 24/7 support into your contract if your company needs it. Enhanced support could save you far more money than the support plan costs by preventing downtime.

5. Customize the contract to your needs

Cloud contracts don’t have to be inflexible, but they frequently are. There is space for negotiation on several issues, including service standards and price. Ask for a contract that matches your business model and growth goals.

• Flexible Service Agreements: Ask for provisions that will let you change how you allocate resources over time without incurring fines. This is crucial for companies operating in quickly evolving sectors where cloud requirements are subject to change.
• Personalization of Services: Request a contract that solely comprises the services you require. Although many services are bundled together by cloud providers, you may not require them all. Make a deal to get rid of extra features that drive up expenses.

6. Look into long-term contracts for additional benefits

When we talk about the long term, let’s talk about its benefits. Long-term agreements typically result in better service and cheaper costs. The ability to make changes as needed and as your company’s demands change is a must in a long-term contract.

It offers more predictability and consistency in terms of SLAs, price, and resource availability, allowing you to more efficiently manage your budget and modify your business plan as necessary. Additional benefits include improved security and adherence to long-term contracts that ensure the security of your data.

7. Never hesitate to re-negotiate your contract

Once a contract is signed, it no longer binds you. Regular price, service, and package updates are common among cloud service providers, so it’s important to routinely review your contract.

• Watch the industry: Keep an eye out for emerging cloud solutions and industry trends. Use the advantage of a competitor’s superior services or price to renegotiate your current agreement.
• Contract Renewal Negotiations: Treat each contract renewal as a new negotiation. Returning clients typically have more influence, especially if they have been consistent, long-term clients.

The Final Thoughts

By following these tips, you can become a better negotiator and obtain better terms from cloud service providers. It is important to keep in mind that successful negotiation is a process that calls for planning, study, and a precise understanding of your objectives.