SaaS Vendors’ New Trick: Multiplying Pricing Caps by Term Length

SaaS vendors are sliding a nasty detail into SaaS renewal term price protections: taking a “3–5% cap” and multiplying it by the number of years in your next term (e.g., 3% × 3-year = 9%). That’s not a cap—that’s compounding pain. Adam shows how to spot it, why it’s spreading, and exactly how to push back.

Key takeaways

• There needs to be a cap on the increase a SaaS vendor can apply to your pricing at renewal
• A price increase should happen one-time at renewal
• Price increases at renewal should not go up with more term commitment
• Make this a front-of-funnel pricing issue (tie it to discount asks), not a late legal cleanup.
• Longer term should mean better protection (e.g., 3-year cap 3%, 5-year cap 2%), not a bigger increase
• Vendors watch each other and manage to what Wall Street wants to see (increases to downstream revenue). Expect this tactic to spread unless you push back.

How to negotiate

1. Insist on one renewal uplift cap (define exactly what it applies to)
2. Remove conditions that hold you hostage to volume/product mix
3. Tie discounts today to locking in clean renewal language now.

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