• Introduction
• Terminology
• Case study sections
• Know your customer
• Principles
• Importance of the ‘Size of the Moat’ / depth of consumption
• Management excuses
• Case Studies
• Case Study: Store Operations Software, 65% ARR uplift
• Background
• Key facts/customer moat
• Legal position
• Negotiation challenges
• Strategy & approach
• Outcome
• Chronology
• Key learnings
• Case Study: WMS Software, 45% Y1 ARR Uplift
• Background
• Key facts/customer moat
• Legal position
• Negotiation challenges
• Strategy & Approach
• Outcome
• Chronology
• Key Learnings
• Case Study: Patient records management software, 320% ARR uplift
• Background
• Key facts/customer moat
• Legal position
• Negotiation challenges
• Outcome
• Chronology
• Key learnings
• Case Study: WMS Project Fee’s and Scope overrun - 300% uplift
• Background
• Key Facts / Customer Moat
• Legal Postion
• Negotiation Challenges
• Strategy & Approach
• Outcome
• Chronology
• Learnings
• Case Study: WMS Retail client 36.6% uplift
• Background
• Key Facts / Customer Moat
• Legal Postion
• Negotiation Challenges
• Strategy
• Outcome
• Chronology
• Key learnings
• Case Study: Supply Chain Management SaaS 275% uplift
• Background
• Key Facts / Customer Moat
• Legal position
• Negotiation challenges
• Strategy and approach
• Outcome
• Chronology
• Key learnings

Introduction

Terminology

Case study sections

Each case study consists of the following sections:

• Background. Explain the software being used, it use-case and the type of customer.
• Key facts / customer moat. See template in Google Sheet here.
• Legal position. What clauses in the contract (if any) that is either ther Customer’s favour (makes it harder to negotiate) or the Supplier’s favour (helps our situation)?
• Negotiating challenges. What are the challenges the customer is going to throw at us? The more specific the better. This could also be in the form of a Q&A i.e. what are all the potential questions the customer can throw at us (either contractually or commercially) and what would our answers be?
• Strategy & approach. Based on the challenges above, what steps or actions did we take to arrive at the final result? How hard did the customer pushback? What were difficult customer questions and our answers? This includes our prep for difficult questions.
• Outcome. Result of all the negotiations in terms of price increases, new contract terms/length, etc.
• Chronology. This shows how long processes take to unfold when having pricing discussions with customers.
• Learnings. Key lessons from the negotiation.

Know your customer

• Look at it by sector and understand if they can afford the price increases.
• F&B e.g. foodbanks (non-profit with deep pockets)
• Retail - need to be more sensitive. They rarely spoke to each other but the market was a lot together. therefore, we could only do CPI correction (in some cases, it was stepped up over time)
• Do the ones that you are more confident of. Once you achieve a decent price increase, you can go after the other.
• Look at LinkedIn - overall health
• Security

Principles

1. Check compliance and invoice for retrospective price corrections (un-billed users, products, modules etc)
2. Separate additional functionality from the core product and charge for the additional functionality as a module.
1. Introduce new features and give it for free on ‘Freemium’ or trials or Beta functionality.
2. In a suitable future period when the new features have provided value encompass them in a rate card or new tier to charge for their use.
3. Operate on longer term contract with CPI+ annual indexation increases, use additional modules to provide added value or updates in security compliance / hosting costs
4. Consider a forced module sale where the customer is ‘compensated’ for the price increase with an additional (pre existing) module (works best with retrospective increases)
5. Communicate the value gap between what is provided and value contracted to the customer, introduce rate cards to redefine the new pricing scheme
6. Unilateral annual price increases(CPI+) without any additional value through products (separate to item ‘C’ as this is associated with new contracts and modules)
7. Change the price carrier to an appropriate one that captures the value, consider users, transactions, locations, modules, code complexity etc
8. Unilateral termination of existing contracts to enable renegotiation of better contract terms

Note - the above principals vary in frequency of use from high repeatability i.e. annually, and infrequent, correctional activities - Graphic added below

Importance of the ‘Size of the Moat’ / depth of consumption

1. When evaluating a value-based price increase in vertical market software, the first consideration is the depth of consumption by the customer (width and depth of the Moat). Unlike horizontal platforms, vertical software is often tightly embedded in a client’s day-to-day operations, handling mission-critical workflows that are costly and disruptive to replace.
2. Depth of penetration creates both high switching costs and a tangible dependency on the solution’s continuity, reliability, and often regulatory alignment. The more deeply the software is consumed whether through the number of active users, integration points across business units, or reliance on domain-specific features the stronger the case for aligning pricing with the value delivered.
3. Depth of consumption should not only be measured in utilisation but also in the outcomes achieved. In our vertical markets, software frequently enables compliance with sector-specific regulations, cost savings through process automation, and/or revenue generation by unlocking new service capabilities.
4. Value-based pricing approach must therefore connect the intensity of consumption with these measurable business outcomes. By framing a price increase as a reflection of the growing value customers extract whether through expanded usage, reduced risk, or higher efficiency organisations can better justify the adjustment and position it as a fair alignment of price to delivered value, rather than as a simple cost escalation.
5. In addition to ‘traditional measures’ numbers of users, locations, teams, consider more vertical measures i.e.
1. Lines of codes that was supporting the customer. Base level logic or something more advanced
2. Number of client specific change requests over the last 2-3 years
3. Numbers of modules consumed vs available
4. Change requests from all clients over extended period and trending (2-3 years) offering greater functionality
5. Customer tenure (supports with moral capital)
6. Customer engagement frequency and type (proactive or reactive)
7. Longevity of product (is it still readily supportable or becoming more legacy)
8. Integration footprints (connected systems)
9. Workflow/production reliance
10. Switching costs
11. Expansion of usage i.e. users, sites, hours etc
12. Regulatory compliance requirements
13. Operational efficiency gains (£/$ benefits)
14. Revenue enablement/capture (£/$ benefits)
15. Risks that are being mitigated
6. Any product that offers a strong solution covering several of the above points combined with a robust relationship is well positioned to introduce a successful VBP.

Management excuses

Case Studies

Case Study: Store Operations Software, 65% ARR uplift

Background

• Customer is multi-national with over 6,000 stores globally
• Supplier solution was deployed in 4,000 stores across 18 countries
• In each country, vendor solution had to be integrated with a third-party solution to gather data.
• Therefore, 18 instance of the software was setup across two Azure data centres. Each instance had a seperate integration with the customer

Key facts/customer moat

Legal position

*Clause Text from “Section IIIA - Special Terms and Conditions, Software as a Service

Negotiation challenges

• Our data points
• With the new pricing, you are paying only $250 per store per year.
• You also are benefiting from significant compliance of the stores with the stores plans using Photo Compliance
• Time saved on 4K stores that is doing the macro-planning using our software is immense
• 6K users are using the solution regularly
• We are managing 18 different environments with 18 different data feeds from a third-party solution provider . This is no different to serving 18 different customers.
• 18 different upgrades each year for the 18 different instances
• We understand that your another key supplier also charges on a per-country basis

Strategy & approach

• To be completed
• Customer Q&A

Clause	Customer question	Our answer
	“CONTRACTOR, warranting that it is entitled to do so, grants to COMPANY a world-wide, non-exclusive, term LICENSE, with rights to sub-license within COMPANY GROUP.”	You can sublicense but you still need to stick one license per user.
4.1b	“LICENSE entitles Company Group (Customer) to allow users to access and the use the software at any worksite or location.”	We are not stopping Customer from using the license at any work site. However, each license (at a country level) is restricted to one user.
4.1c	“The LICENSE granted under this CONTRACT is not tied to any specific COMPUTER SYSTEMS or to any specific WORKSITE or location.”	Again, you can use it at any location but it is restricted to one user.
12	These rights under an ONLINE SERVICE SUBSCRIPTION entitle COMPANY GROUP during any SUBSCRIPTION PERIOD to: ….(iii) install and use SOFTWARE provided by CONTRACTOR and necessary for the use of the ONLINE SERVICES;…..(iv) allow USERS to access and use the ONLINE SERVICES from any location;	This does not negate the point above re licensed copies of the software being tied to specific computers
	Understand you are changing your pricing model to from a flat $60K to a per-country model. You said in your 2023 renewal that the cost of support per country was $7,410. Why is the support cost per country now significantly higher?	We are apply our current pricing model to be consistent with other customers and to reflect the current reality of how Customer uses the systems.
	In the current contract, you charged a $45K flat fee for Storespace online regardless of the number of countries. Why is there now a country specific charge?	As previous said, we are resetting the pricing model in terms of how we charge our other customers.
	What is your pricing model for 4K stores?	If all the 4K stores are hosted on a single instance/database, our pricing wouldn’t be dis-similar to what you are paying
	You have no choice but to renew on the same terms.	That is fine but the current contract does not reflect the reality of how the system is being used at all- No definition of “license”- Clause on users says that we need to pay more for users
	Guy agreed to the renewal last year on the basis with additional support fee. Why is this an issue?	We are looking at this cold and we have done an audit and what you are using is completely dis-proportionate to the pricing.
	What is the basis of the price increase?	The original plan was to charge on a per-country basis based on a separate a) Storespace online license and b) number of users.
	We don’t need 8 licenses for each country.	That is fine. Then we need to understand the number of licenses you need per country.

Outcome

• TBC

Chronology

• 2016 - implementation started
• 2020 - implementation slowly rolled out to 18 countries over the 4 years
• Aug 2018 - original contract signed
• Aug 2021 - contract extended to 2024 with extension at the right of Customer for another 2 years.
• Jun 2023 - email from Supplier MD confirming to Customer the price increase based on inflation
• Jun 2023 - addendum to show new prices
• Jun 2024 - initiated discussion with Customer and focused discussion on contractual mis-pricing due a breach of license terms e.g. number of users by country is not reflected in the price

Key learnings

• TBC

Case Study: WMS Software, 45% Y1 ARR Uplift

Background

• A European aerospace manufacturer, a long-standing client, relied on a bespoke Warehouse Management System (WMS) that had not seen a pricing adjustment in several years. The system was mission-critical to supply chain operations but considered tactical due to an intended SAP migration. By rebuilding relationships, demonstrating value, and framing the negotiation around inflation, legacy support costs, and consultancy services, a 45% price increase was secured. The outcome improved ARR contribution and established a framework for future uplifts. The customer is a European aerospace manufacturer of enterprise scale had been the largest client for over 15 years of a bespoke WMS software provider based in England. The contract and associated commercials were on annual autorenewal terms and had not been updated in several years with direct engagement with the client by exception as the previous account management team had since left the WMS business. The client represented 8% of the ARR of the WMS business but was the pinnacle client of several other aerospace supply chain clients that collectively were 20% of the ARR.

Geographical Reach of Product

• Product itself was a modified iteration of the standard WMS provided by the supplier many years prior. It was migrated to SaaS within the past 5 years and minor upgrades undertaken primarily around security and access controls. The primary product now has a global SaaS reach with high user volumes (over 5,000) and is rich in configuration and customization options to meet client requirements across several verticals including 3PL, Manufacturing, Retail and F&B. Attempts to negotiate to migrate the customer to update versions of the product were dismissed given the strategic move to SAP.

Key facts/customer moat

Legal position

• The contract was over 15 years old with annual auto-renewal terms in place in the event neither party chose to exit
• The term’s allowed for annual increases with no specific reference of CPI but as previously mentioned, none had been implementation for many years.
• The exit terms for both parties were 90 days in writing at any point during the 12 month contract cycle but couldn't come into full effect if initiated by the supplier until the 12 month cycle concluded (provision ensured the client retained use of the system until every year end regardless of notice served by the supplier but services i.e. support could cease after 90 days).
• SLA’s on system uptimes over 99.99% and clear SLAs on support response times.

Negotiation challenges

• The annual auto-renew period within the contract allowed for a specific period for negotiation to take place (October to December) but these conflicted to the Purchase Order (PO) sign off period required by the customer (3 months or September deadline). This meant we had to commence conversations very early in the cycle and in principle allow the client more time to find an alternative vendor or solution. Budgets were set annually by September for the subsequent years, and the contract term ran on a calendar year meaning we needed to begin negotiation in the summer to gain approval in adequate time.
• The client stated that any increase over 10% was deemed to be more than inflation and would require additional approval from the central supply chain management team and any increase over an undisclosed value would trigger central procurements involvement. Any changes requested on payment terms, payment cycle or currency changes (we billed in euros as the client HQ is in Europe) would also require central procurements engagement.
• Our primary point of contact was a relatively junior team member who reported into a team in Europe within the clients supply chain division. The customer acknowledged they had not seen an increase in several years and were surprised by this but stated clearly, they would not entertain anything back dated.

Strategy & Approach

Our strategy given the limited relationship we had with the legacy customer was to allocate a new Account Manager to them and then follow the below;

• Build relations and understand the value of product offered the client at a true depth. We undertook several visits to the primary location with Consultants, Account Managers and me, the Managing Director in attendance.
• Establish Long term strategy of the client was then understood to migrate all operations to SAP was hitting significant delays.
• Organisation Structure their UK Supply Chain management structure had several vacancies and the knowledge and useage of the system was held exclusively by the 3PL.
• Validate System Value the WMS system was invaluable to the client in the short to medium term, they had little capability to quickly switch systems without losing oversight and/or significantly increasing their cost and risk & the 3PL operating and using the system daily did not have a WMS offering of their own.
• Rationale We built our rationale on two key elements, the first was that no increases had been made in several years and inflation alone compounded to a circa 20% price increase, the second was the value and support required on the legacy system required COBOL developers to maintain of which we had one in resource in place. We also wanted to create space for annual increases above inflation progressively over the next few years to increasingly cover maintenance and offer consultancy services, annual health checks to ensure we were well placed to influence their UK procurement in this area.

Outcome

• 22% increase to base price for 50 users based on CPI over the past several years
• 15% increase for support of a legacy system
• 8% increase for consultancy, health checks and security testing i.e. Pen testing
• Overall, an increase of 45% was achieved with agreement that we would remain on the current terms of payment and annual renewal with a contract addendum stating increases will be negotiated annually above CPI.

Chronology

• 2002 - Contract initiated between supplier and client
• 2003 - 2018 - several CPI price increases implemented
• 2018 - 2023 - Contract and commercial terms static
• 2023 - Original Account Management team left the supplier as part of a restructure leaving limited knowledgeable resources within the supplier’s team
• Jan/Feb 2024 - VBP approach developed & documented internally and supplier team allocated (Account Manager, Consultant, Lead Developer and Managing Director) to account for renewal
• Feb/March 2024 - New account team began engagement with the client
• April/May 2024 - First client site visits and reviews took place
• June/July 2024 - Commercial negotiations took place across three separate occasions
• August /September - Commercial discussions finalised and agreed and new PO issued
• Jan 2025 - New commercial terms come into effect

Key Learnings

• Relationship – We quickly rebuilt a stagnant relationship showing genuine interest in the solution we were helping deliver and the service it was providing. Throughout we offered value in the engagements with the customer with proactive suggestions on how they could improve the warehouse set up and manage inventory. This demonstrated a level of expertise and built a degree of trust with the customer. We committed to collective QBR’s and sharing additional data reference points that were already available to the client but not leveraged.
• Value – We worked to establish the value that the software was bringing the client, how, when and where it provided gains for them and in what capacity. Far from a standard WMS, it was a central point across their supply chain and deeply embedded in their operation. – With the attrition of account management and poor leadership within the supplier this value had been lost and misrepresented over many years.
• Alternative – One of our primary aims in reengagement was to establish what viable alternative the client may have and in what timescales this could be implemented. We worked directly and indirectly to establish this and came to understand the wider SAP migration project was some 5-years from delivery. This influenced our thinking to ensure we pushed the client hard on the renegotiation but not to the extent to damage relationships. We also validated that the 3PL that used the software could not offer an immediate alternative as they use external software for their WMS and logistics platforms.
• Strategy – We planned and re-planned each stage of the process robustly from engagement, client goals, options, solution and value, consistently revisiting these planned outcomes each time. Showing a methodical approach allowed us to build value, time, relations and knowledge with the client throughout.
• Challenges were primarily of our own making in that we had over time lost relationships with key stakeholders, combine this with a lack of knowledge of how they consumed the software and access to key decision makers, and we had risks that required addressing. Another significant challenge was the internal nervousness from the team involved and indirectly involved with the client. There was significant nervous energy around given the scale, tenure and revenue values involved with many team members wanting to ‘cave’ in discussions or rush to offer a price – they doubted the software and their value in the relationship.
• Risks & mitigation were maintained in a risk log of which only the directly involved team members had access too, this was updated frequently to ensure any new information was captured and the risks monitored and managed by the account team. Risks on timeline, stakeholders, value, system capability, resource capacity and more were captured and mitigation offered. The entire negotiation was managed like a commercial project with timescales and deliverable and associated risks to ensure a positive outcome was delivered.
• Role-play the conversation internally over several weeks to build belief and confidence within the team to every conceivable scenario that could play out. Each team member had a key role to play and the narrative across all members was consistent and reinforced internally frequently. External team members were used for role play where they have little knowledge of the client and sales team drafted from other parent company businesses to support in preparing the team.

Case Study: Patient records management software, 320% ARR uplift

Background

Key facts/customer moat

Legal position

Negotiation challenges

Outcome

Chronology

Key learnings

Case Study: WMS Project Fee’s and Scope overrun - 300% uplift

Background

• A global aerospace supplier of key components to the production of aircraft wings & fuselage who had been using the suppliers bespoke WMS product for over 15 years and it was a mission critical component of their primary manufacturing facility in the UK. Relationships with the customer were good however a poorly scoped and undefined upgrade to the WMS system was sold to the customer some 2-years prior by an outgoing sales director. Over a period of 12 months, a scope was agreed and an uplift in price for the ongoing project of 300% was also agreed on the same payment terms as previously agreed.

Customer Vertical

• The customer is a global enterprise with circa 12 manufacturing locations across the globe and had been a client of the vendor for circa 20 years and had grown considerably over the first 5 years of the relationship. The supplier is a bespoke WMS provider based in the UK with a strong heritage in Aerospace and this supply chain specifically with several customers from the same supply chain.
• The key components of the client that resided on the WMS product were primarily fasteners, bolts and fixings with extended timescales on delivery and in some cases only two manufacturers globally.
• Lead time for the clients products to the end customer were 2.5 years from order to delivery with exceptionally high fee’s for delays or delivery failure on quality or time.
• The customer exclusively used the suppliers bespoke WMS for this location & workflow with interfaces into other third party logistics software tools operating outside of this.

Software Type

• Software is a Warehouse Management System (WMS) and is delivered as SaaS at a single manufacturing location for the customer on a legacy COBOL code base. The software is being upgraded to Java based code as part of a future proofing project with some additional features primarily focussing on reporting, analytics and lead time forecasting. The single location being supported has some basic file upload capability for data interface with external systems but largely is stand-alone within the manufacturing facility. Given the software’s longevity with the client, it is held in high regard internally and seen as an accurate benchmark for the visibility it provides.

User Numbers & Scale

• Given the software is only used at a single location as part of a much wider supply chain it only has less than 5 users within the client. These users operate the product with varying degrees of knowledge with the most significant knowledge holder due to retire later in the year (2024). The management team use the software for reporting and KPI’s against picking performance and assembly only and have limited product knowledge outside of this. The site and software operate for 12 hours per day across a 6 day week based on the shift rotation of the facility. Other locations globally operate independently using unknown software tools to provide the same product services.

Instances of Use / Business Functions

• The WMS has approximately 250 SKU’s from 10 manufacturers and shows product volumes, availability, location and provides optimised picking routes and replenishment recommendations for the customer. Specific analytics and dashboard reporting were built for the customer some 15 years prior. The primary but ambiguous scope for the upgrade project was for general system and code hygiene to improve system speeds, data refreshes, future proof to a new code base and provide additional dashboard reports for management. The client was very reluctant on the upgrade wanting to change very little given the risks of slower delivery and lack of team product knowledge but accepted it was required for future-proofing alone.

Geographical Reach of Product

• The product was migrated to SaaS from on-prem some decade prior but before the current project to upgrade to Java the product was largely untouched for 15 years. Additional security measures and log in controls had been put in place but it contained non-sensitive data so was not deemed a risk. This product operated as a stand-alone away from the primary WMS product offered by the supplier and met the clients’ requirements for scope and scale sufficiently. The drive to upgrade the product was largely down the supplier’s sales director having successfully pushed this some two years before largely due to the legacy platform and code base.

Key Facts / Customer Moat

Legal Postion

• The contract was over 10 years old with annual renewal terms unless either party chose to exit providing 90 days’ notice within a 1 week window.
• The terms did not state any limitations or assumptions on the pricing for either the system access, maintenance or projects costs and did not reference CPI – it was a SoW with payment terms only with annual negotiation provided through quote and subsequent PO.
• SLA’s were stated in the contract with minimal stated system downtimes and heavy penalties should a Severity 1 /Priority 1 (system unavailable) for any ‘prolonged’ period.
• The project scope and commercials were covered by a separate unsigned document which did not refer to the contract terms. This agreement was made verbally with the original, now exited Sales Director and the established Head of Supply Chain from the client. This agreement stated an additional fee of £2k PCM would be charged for the duration of the project but should be included as an unnamed addition to the ongoing £10k PCM fee for system access and support.
• Total monthly fees billing quarterly in advance was £10k (System access) + £2k (Upgrade project)

Negotiation Challenges

• The client was a very reluctant project customer and adopter of the new product seeing only value in future proofing which they didn’t fully appreciate. This led to them being incredibly averse to change.
• Head of procurement had agreed project terms very loosely with the supplier (former Sales Director) with limited scope and no formal approved commercial agreement but payments were and continued to be made on time.
• The client was unable to secure capital expenditure and so project costs had to be distributed over many months.
• Supplier project (PM, Development etc) costs had to date, far exceeded the revenue from the project with no control for the first 24 months on the time spent on the project – this therefore required backdated effort to be captured and billed.
• Client had limited time and knowledge to test the system and regularly explored the idea of mothballing the project and continuing with the legacy solution.

Strategy & Approach

• Rebuild relations - the supplier/client relations was held with two members of the project and development team only with no Account Management / Project Management systems or relations in place. This took a little time to build these new relations, extended on the levels of trust the client had with their long-term points of contact.
• Define Project Scope – the SoW for this project was a single page of aspirations/wish list from the client with no timescales, costs, deliverables or structure of any kind, the client was prepared to go live with the new product without having tested it based entirely on the suppliers long standing project teams statement and desktop tests. We rebuilt a SoW with screenshots of solutions, considerations, deliverables, milestone sign offs and commercial anchors to reach an agreement. This demonstrated value to the client beyond futureproofing and facilitated conversations around a larger roll out to other global locations once the solution was proven.
• Senior Relationship Management – the client demonstrated apathy towards technical team members and had a very traditional approach to vendor management. This quickly led to the creation of a project board and sponsorship structure to allow the Head of Procurement a platform to speak freely with senior members of the supplier team.
• Commercial Agreement – With aged time and material having far exceeded the commercial values paid to date we found agreement to factor these in to a new rate moving forward. Whilst this historic cost was largely met prior to the new parent business acquiring the WMS supplier it represented an opportunity to receive new revenue for sunk costs. The supplier’s preference was to receive milestone payments from the client but this would have required capital expenditure approval, it was agreed that the increased fee would cover aged time and project costs at the appropriate annual rate from the supplier and time would be fixed monthly to ensure no time and material overrun. This would also be considered once the project had concluded and a new rate for SaaS and support of the new product commenced.

Outcome

• New recorded scope of works with set terms, deliverables, target dates & dependencies secured
• New time and material based commercial agreement founded
• 300% (x3) increase in project MRR revenue
• 100% retention of existing system access terms and maintenance
• Agreement to review all T&Cs once migration to new product has completed with value/charges to exceed those currently

Chronology

• 2002 – Contract initiated between supplier and client
• 2003 – 2008 – annual increases and some minor product development took place
• 2009 – 2021 – No recorded change to commercials or product
• 2022 – Sales Director secured project to upgrade to Java with undefined scope and open ended commercial term
• Jan 2024 – New MD and account team visited site
• March 2024 – New project team lead allocated
• May 2024 – Project governance and ‘state of play’ recorded
• June 2024 – Project and account team visited client site to review project
• August 2024 – New project scope and timelines agreed
• October 2024 – New Commerical agreement, scope and terms ageed to commence in new year
• Jan 2025 – New commercial project terms commence

Learnings

• Customer relations and approach - Despite having strong a strong customer relationship, this relationship was held with only two long standing supplier team members and that had become very subservient to the client. There was little to no commercial relationship and the scope of the project and overarching support services were uncontrolled and unstructured. We spent some time converting the clients view that becoming more standardised & structured in our client relations would breed better outcomes on both the project and service as a whole.
• Capital expenditure - Best practice for commercial project management would suggest payment in advance of services or second to this, milestone payments on delivery. These conditions weren't acceptable to the client as any single high costs had to be capitalised expenditure which required a seprate budget and PO which would have taken some considerable time to obtain. For this reason we opted to operate on a time and material basis with a fixed cost monthly securing a fixed value of PS hours, a report was then shared monthly with the client tracking time useage and output. This also allowed us to recover aged hours that had been provided in prior years and reduce that from a balance sheet that we maintained internally.
• Project Scope & definitions - One of the primary challenges on this project was a lack of fixed deliverables and scope which in turn then meant the project was operating without fixed time or outcomes. This significantly reduced the value of the project and software to the client as they had no visibility of the value being created within the product and frequently suggested they may close it down. Creating this value and associated structure was key to not only managing the project but also increasing the fees to the appropriate years rates and recovering aged costs in tandem.
• Time & Material and project burn down - With fixed payment projects against time it's imperative to track outputs and time spent (burn down) for both the client and the supplier. In this case this had not been done and we (the supplier) retrospectively recovered and analysed the time spent to date using internal reports. Sharing this data with the customer and aligning it with the appropriate years PS rate demonstrated significant overspend through time on the suppliers behalf. This overspend was acknowledged and we managed to mitigate this by elevating the rateable hours moving forward to compensate for this. From here we created regular cadence for both the client and ourselves on regular reporting and timesheet usage on progress made against hours used. - This was a significant step in gaining new account management and PS team’s confidence from the client.
• Client software adoption - It was initially presumed that the client would recognise the need for change in their software given they had paid circa £48k to date for its development. This proved incorrect and the client was very reluctant to continue to they saw limited benefit in moving to a new product and only the challenges in rolling out a new solution. Considerable effort was made on the supplier behalf to clearly demonstrate value in the new product alongside a client centric approach of understanding their desired areas for improvement and adaptation. Through significant education and billable time we converted the client to an advocate of the new solution who then proposed using this as a test case to expand to other locations.
• Future agrement - Once the PS rates and time had been addressed commercially we also found agreement that all future rates would be adjusted for CPI+ for both PS and for product. It was acknowledged that the client had not seen a rate increase in several years but we recognised applying a rate increase now given the pending move to a new product would be counter productive. It was therefore formally agreed that a new rate for access to the SaaS product and structured maintenance package would be adopted using the suppliers set rates for both. We also agreed a discount scheme with the primary location for every successful addtional site that adopted the software. At the time of writing the project is yet to complete so these rates are yet to be leveraged.

Case Study: WMS Retail client 36.6% uplift

Background

• The client, a growing e-commerce clothing retailer, implemented the WMS three years prior to support its transition from manual stock management into a fully automated warehouse operation. During this period, order volumes increased but the client had experienced some financial challenges coming out of the Covid pandemic and had taken on additional investors to continue trading. Despite the significant increase in business value delivered by the WMS, the pricing had been fixed for the initial three-year term at the equivalent to the first year’s rates, leaving a gap between value realised, revenue captured and indexed inflation. The WMS product was largely the standard product offering with some customised features for the customer and with a direct integration into their ERP but the primary anchor was the cost to transition to another WMS product.

Customer Vertical

• Online clothing retail business with a growing presence in the UK and Europe, specialising in fast-moving consumer fashion with peak seasonal demand.
• Sector characterised by tight margins, rapid order fulfilment requirements, and a growing reliance on robust supply chain technologies.
• The sector was coming under significant cost pressures from new clothing lines from the far east that were undercutting costs and challenging demand driving the client to reduce costs and their product price point.

Software Type

• Cloud-hosted SaaS WMS, integrated with the clients ERP and third-party logistics carriers. Provides real-time visibility of stock, order orchestration, and returns processing with some customized features specific to the client to accommodate their warehouse design and legacy processes. The WMS software had undergone several changes through version design increasing security, UX/UI and system speed over the course of the three year client relationship.

User scale and numbers

• Initial adoption: 25 users across a single fulfilment centre remained largely constant with some reduction in user numbers outside of clients peak periods
• Daily transaction volume range 3,000 orders/day to over 12,000 orders/day at peak season
• WMS is mission critical with the clients ERP unable to accommodate their warehouse layout logic and historical customization requests.

Instances of use

The WMS is used for:

• Automated pick/pack/ship workflow, order pick flow optimisation (routing) for legacy warehouse design
• Returns management and restocking, real-time SKU visibility for over 1000 products across online channels
• Integration with carriers for next-day and international shipping
• Performance reporting and fulfilment SLAs
• Basic product forecasting and replenishment metrics
• Integration into third party Transport Management System and directly into carriers

Geographical reach of the product

• The WMS is deployed across the client’s UK distribution centre with integrations to carrier networks supporting UK and the EU. The wider SaaS product has more complex functionality and capacity not required by the client with global reach and 1000’s of users across several verticals outside of retail/E-Commerce.

Key Facts / Customer Moat

Legal Postion

• The existing agreement was due for renewal after three years with auto-renew terms without confirmed increased fee’s.
• Both parties had the right to terminate after the three years initial term providing 90 days notice
• An updated SaaS contract was now in use by the WMS supplier with all customers migrating to the new terms upon completion of their initial term
• New contract had set CPI+ terms as standard and tiered pricing based on users and functionality useage

Negotiation Challenges

• New rate card mistakenly shared by WMS supplier account management team several months before initial term expired
• Client sensitivity, Willingness to Pay (WTP) and cruicially ability to pay due to cost increases given margin pressures and recent investment within the business
• Procurement team initially benchmarked against generic, lower-cost non bespoke WMS alternatives
• Client concern about developing vendor lock-in due to operational dependency on the system and clients planned growth
• Clients business undergoing significant cost reduction measures, business restructuring and supplier contract cancellations for non mission critical services/software
• Access to decision makers was protracted with more junior procurement client team members requesting direct access to the WMS Managing Director
• Depth of product useage/Moat size not as strong as many other clients

Strategy

• Value Articulation: Quantified the original impact of the WMS on operational efficiency, e.g., reduced fulfilment errors by 40%, cut order processing times by 30%, and enabled scalable peak trading without significant additional headcount This was then discussed, demonstrated and reported to the client with use of dashboard reporting, monthly business reviews and white paper publications across all customers.
• Benchmarking: Demonstrated ROI versus alternative WMS solutions, highlighting cost of disruption and integration risks if switching using existing case studies and sales collateral.
• Future Certainty: Proposed a three-year renewal with fixed annual increases, providing budget predictability whilst more closely reflecting real value delivered by the WMS product.
• Executive Engagement: Elevated discussions to Client Finance Director and WMS Managing Director level, reframing pricing around business growth enablement rather than software access fees.
• Demonstrated product investment: and pipeline with new modules, features and integrations continuing to be developed and implemented through future product releases. This showed continued value in the product as many of the development plans were targeted at automation in E-commerce.
• Fixed & maintained postion: Outside of senior management within the WMS supplier, all parties understood the WMS supplier would exit the current agreement, cost to serve was calculated, removal of revenue from forecast with modelled cost reductions if required - This was a key driver as it presented a very unified postion from the WMS supplier regardless of who the client had contact with from the WMS supplier.

Outcome

• New three year agreement secured with fixed prices based on users for each of the three years with enhanced payments terms from monthly in arrears to quarterly in advance.
• Exceptional inflation mitigation risk captured if inflation exceeded 8% in any 6 month period
• Extended and seperate professional services agreement made to further customise the WMS product for the client
• Year 1 increase rate 15%
• Year 2 rate increase a further 10%
• Year 3 rate increase a further 8%

Chronology

• Q1 2022 - initial three year fixed rate agreement between Retail client and WMS supplier commenced
• June 2024 - New standard rate card shared with client in error by account management team providing the client time to source alternative WMS provider
• July 2024 - Supplier procurement and WMS supplier early engagement and reveiw of service and software commenced
• September 2024 - First discussion between WMS supplier Director and Retail client head of procurement
• October - December 2024 - Ongoing intermittent conversation between Junior procurement at the client and WMS account management team
• December 2024 - 90 day termination window opens with three year term expiring in February 2025
• January 2025 - Final agreement reached between WMS Supplier Managing Director and Client Finance Director and contracts signed

Key learnings

• Control of information release - Clear and preferably automated control of commercial information regarding businesses rate intentions are paramount, the early inadvertent release of the revised rate card to the client prompted them to review the WMS market and price match the current vendor.
• Client Willingness To Pay (WTP) is heavily influenced by their Ability to Pay and across some sector verticals this can be cyclical.
• A structured approach to renegotiation leveraging the 8 principles pays dividends in controlling the pace, timing, leverage and delivers better negotiated outcomes. This negotiation was a recovery following the early information release and allowed the client to be well prepared through procurement and having clarity on the value proposition. Leveraging the hard deadline of the original three year term contract would have driven the value of the WMS product higher.
• Cost certainty is key for many clients, the retail client was willing to pay slightly higher than CPI+ to ensure they had good cost certainty and move from a credit based account to payment in advance for software access.
• Senior team relations can be imperative to securing an increase, visibility on both parties to senior leadership helped find agreement in this case. An element of trust was lost at a junior level on both sides and it required a course correction by both senior teams, this relayed a foundation for agreement and for extended this services with additional Professional Services to further customise the product.

Case Study: Supply Chain Management SaaS 275% uplift

Background

• A large Principal Contractor construction business with a UK turnover exceeding £500m with an expertise in large complex projects of over £100m value with 3-4 year build cycles. The business is privately owned and profitable and expanding further south in the Uk from its northern routes and strong supply chain. The supplier is an international Supply Chain management SaaS business providing a network of approved contractors of all disciplines providing vetting and compliance checks against insurance, trade competency, accreditations and financial health amongst others. Principal contractors like the client adopt the SaaS product for negotiated annual subscriptions to access the database of accredited contractors whilst encouraging their existing supply chain to join the accreditation scheme. The annual subscription model for the principal contractor varies dependent on the volume of referrals offered and subsequent contractor sign-ups to the accreditation software. The Principal Contractor construction business has been a long term adopter of the base level of the SaaS product paying heavily discounted membership fee’s based on historical contractor sign-ups.

Customer Vertical

• The client operates in large scale construction project’s and land development including Mechanical and Electrical installations, building high value complex development for primarily the public sector. With several active projects across the UK, their supply chain is complex and sensitive to delays, non-conformance of accreditations and attrition from regional contractors requiring precise procurement and strong compliance. The business is expanding south from its northern heritage and has a much weaker supply chain across the southern counties especially across high value mechanical and electrical contractors with competencies on technical builds i.e. hospitals, laboratories and power generation plants.

Software Type

• The supplier provides a Supply Chain procurement & compliance SaaS platform, focused on supplier accreditations and principal contractor procurement. The SaaS product offers a range of data points for each contractor from project history, reviews, score cards, key KPI’s including H&S incidents, accreditations (insurance, competency, key personnel etc), availability and project sizes. Over the last 2 years, the platform had been enhanced with AI-driven financial scores, Environmental and Health & Safety forecasting amongst other enhancements and crucially met new legislative changes that were coming into the construction industry (Building Safety Act).

User Scale and Numbers

• The platform is used by 1000’s of users daily across both the contractors (suppliers) and Principal Contractors (buyers), including procurement managers, supply chain analysts, and finance controllers. Users are spread across HQ and multiple UK and European satellite offices, with teams accessing the system daily for procurement decision-making, supplier verification checks, and reporting. The product is regarded as market leading occupying some 70% of the market with a strong heritage and reputation within the industry. Following PE acquisition, the product was significantly redeveloped and several addtional features added through SIG collaboration with some of the largest Principal Contractors in the Uk industry.

Instances of Use

• The software is largely mission-critical once fully adopted, managing procurement approvals, supplier performance monitoring, exception management, and risk alerts. With several significant legislative changes within the Construction sector i.e. Building Safety Act requiring comprehensive competency checks be carried out on all contractors and individuals being seen as a key compliance metric for the sector. It integrates with the client’s ERP system to provide a single source of truth for purchasing & performance data and to enable executive dashboards for spend analysis, procurement and EHS performance.

Geographical Reach of Product

• The product operates exclusively within Europe due to regional construction regulations and strict GDPR compliance requirements. This European focus ensures data sovereignty and aligns with the client’s legal and compliance mandates. The product was founded within the UK and the VC backed parent continues to acquire businesses within similar verticals across Europe to expand its product offering and supply chain contractor depth.

Key Facts / Customer Moat

Legal position

The contract was a rolling SaaS agreement with 12-month auto-renewals, cancellable with 90 days’ notice without limitation of users but with incentives for supplier referrals and minimum stated referrals clauses which were rarely exercised historically.

- Supplier Advantage: No clauses capped annual fee increases, and pricing was subject to renegotiation at renewal and minimum stated contractor referal mechanism within the existing contract.

- Customer Advantage: Strong SLA clauses with financial penalties for downtime and service-level breaches, giving them leverage to push back on price if performance faltered. Despite stated incentive clauses on supplier referrals, historically, financial incentives (SaaS discounts) to the principal contractor were provided in advance and minimum contractor clauses never invoked.

This legal framework provided flexibility for the supplier to propose a value-based price adjustment but required ensuring SLA compliance before initiating discussions.

Negotiation challenges

• The software in its original format was provided Pro Bono for Principal Contractors as the revenue stream was focussed on smaller independent contractors who obtained a fee based accreditation and were then published on the platform. The fee’s for Principal Contractors were in early adoption and been in practice for less than 2-years.
• The lead contact at the Principal Contractor (customer) was an experienced, qualified procurement professional trained in negotiation and ROI driven but had limited product exposure and software subscription knowledge.
• The negotiation required a new contract set of terms which whilst were similar to the historical contracts did have new pricing strategies in place for supplier referrals and advanced discounting deliverables stated more clearly.
• The client was using Tier 1 of 2 (Standard and not Advanced) and 3 of 4 modules and all the SaaS product enhancements had taken place outside of these i.e. in Advanced tier and module 4 (Risk and Financial module) so the client had little visibility of the improvements and offering.
• The suppliers competitors were very active in the market having recently been party to a PE investment themselves, strong marketing and financial incentives for Principal Contractors were common knowledge.

Strategy and approach

• Relationship Reset took place with a senior solutions Director allocated to support the account team in negotiations and positioning the value of the existing product and new enhancement of the higher product tier (Advanced) and module 4 (Risk and Finance) .
• A Free Trial was offered (in demo mode with redacted contractor data) and with limited functionality to two senior members of the procurement team of the principal contractor.
• Additional Workshops were held with the supplier team using real data to map the principal contractors projects in the southern counties showing the platforms depth of suppliers and procurement reach.
• Real world Risk and Financial events were demonstrated to the principal contractor and the platforms ability to forecast likelihood based on historical data were shown.
• A Deadline for Negotiation was enforced by the supplier prior to a planned price increase which was still being discussed internally, this played well considering the principal contractor project start dates in the southern counties quickly approaching.
• A Final Face to Face with the two of the principal contractor’s board members and the procurement director was then secured to close the agreement.

Outcome

• A new three year agreement was reached with a two year break clause for both parties with CPI+2% PA.
• All four modules and the Advanced package was sold to the principal contractor with an uplift of 275% (£12k - £45k)
• An agreement formalised where years two and three of the agreement would be discounted if the principal contractor ensured 90% of their suppliers were accredited by the supplier by enforcing a change in procurement policy.

Chronology

• 2018 - Principal contractors initial contract with the SaaS supplier commenced
• Sept 2022 - New account team and solutions director allocated to the account
• October 2022 - First engagement with principal contractor occurred (terms of expiration of current agreement set out)
• December 2022 - Free trial and initial workshops held
• February 2023 - Further workshops held
• April 2023 - New contract terms agreed and signed
• May 2023 - Original contract term ended, new contract and commercial terms in place

Key learnings

• Value Proof Essential - Considerable time went into demonstrating the value of the product both in terms of the current features which were passively used and then to the new features which had not yet been discussed. Scenario setting and consultative ‘what if’ feeling approach had been followed using the MEDDIC sales principals;
• Metrics - Depth of the product capabilities and metrics were shown and free trial offered demonstrating the southern counties contractor offering to help deliver their new construction projects.
• Economic buyer - Understanding who would champion and ultimately approve the purchase was established and the final face to face secured 2 months in advance
• Decision Criteria - the supplier knew the principal contractor required contractors in the southern counties and the presented a solid solution
• Decision process - As the supplier was dealing with procurement directly we appreciated and documented early the steps to go through to secure the agreement.
• Identify Pain - Southern counties contractors and compliance with new Building Safety Act were the primary objectives
• Champion - the supplier worked hard to secure this within the procurement team given their lack of product and SaaS knowledge the free trial was pivotal.
• Legislative solution - The changes in legislative approaches and liability had the industry generally needing change to meet the new demand. Changes through Special Interest Groups of larger principal contractors facilitated this and positioned the product very well to meet the changing needs of the industry.