Benchmarking in procurement: Leveraging data for smarter SaaS negotiations

Software vendors typically have the upper hand in negotiations. At least they do when they know their value and can dictate the terms.

But it doesn’t have to be this way.

With access to accurate supplier benchmarks, companies can level the playing field — gaining visibility not only into pricing, but also vendor performance, product fit, and potential risk.

In this guide, we explore what procurement benchmarking entails, how top-performing teams leverage these insights to secure better deals, and how these benchmarks lay the foundation for informed vendor selection and long-term strategic planning.

What is benchmarking in procurement?

Benchmarking in procurement is the process of comparing solutions – in this case software – across several dimensions to determine the best fit for your business.

While price tends to be the initial consideration – which comes as little surprise given how SaaS costs are rising 11% each year and companies are under increasing scrutiny to minimize this spend – basing vendor selection solely on pricing rarely leads to optimal outcomes.

Procurement leaders must also evaluate factors such as functionality, support, and reliability to ensure that the chosen vendor aligns with the organization’s specific needs, and that potential risks are mitigated through careful selection and better contract terms.

Benchmarking doesn’t just inform vendor selection though. It also directly strengthens your negotiation position, by providing the data needed to challenge pricing, set realistic expectations, and push for more favorable terms.

Why software pricing benchmarks are still crucial

SaaS contract negotiations are not only resource-intensive with each one requiring an average of 21 days to complete, but procurement leaders are also under constant pressure to maximize savings, manage risk, and deliver results in an increasingly fragmented tech environment.

The result?

An unsustainable load on an already stretched team.

To complicate matters further, the average software stack now consists of 132 applications, growing at an annual rate of 11%, with 89% of those contracts subject to auto-renewal clauses.

For the vast majority of procurement teams, there simply isn’t enough time in the day to scrutinize and negotiate all of these contracts in detail. And even when there is, many organizations lack the pricing intelligence needed to secure the most optimal outcomes.

This gap in visibility leads to significant overspending, with our data showing that 90% of companies overpay by an average of 26%.

At the heart of the issue is a lack of reliable pricing benchmarks. Without accurate pricing intel, it’s virtually impossible to understand where a quote falls in the market.

Vendor list prices often aren’t reflective of actual deal values, and final pricing is influenced by a host of factors – from contract length, terms, number of licenses, and plan types to name a few. Even the most experienced procurement professionals can find themselves at a disadvantage without this insight.

This is where pricing benchmarks become indispensable. They offer real-time data on what similar companies are paying, providing teams with the clarity and leverage needed to challenge inflated pricing, strengthen their negotiating position, and deliver measurable savings.

But while pricing benchmarks are essential for leverage, they are only the starting point. Supplier benchmarking data should also be used in procurement to assess vendor fit, mitigate risk, and maximize long-term value across the entire tech stack.

Why procurement benchmarking is about more than just price

Focusing solely on price overlooks a key part of vendor selection: risk.

Capability benchmarking helps you evaluate whether a vendor can truly deliver, based on integration needs, scalability, support, and long-term fit. It ensures you’re not just saving money, but avoiding costly mistakes such as poor adoption, technical limitations, or being tied into inflexible contracts.

Rather than looking for the cheapest solution, you should ultimately be identifying the vendor that best aligns with your business needs, shifting the conversation from cost alone, to capability and fit.

Peer benchmarking: What your cohort is using matters

Knowing which tools other similar companies are buying – and how they’re performing – adds a further layer of market insight.

Peer benchmarking in procurement specifically enables you to:

• Understand the industry standard for companies in your industry and with similar needs.
• Identify the tools that may be underperforming or are becoming less relevant.
• Identify emerging vendors gaining traction with your peers.

How to use supplier benchmarking insights in SaaS negotiations

Here are some of the key ways you can utilize both supplier pricing and capability benchmarking data to strengthen your SaaS negotiations.

1. Anchor negotiations with market data

Most vendors will try to anchor your expectations with their own list pricing, but if you’re armed with the right benchmark data, you can set the baseline. To show that you’re informed, but are being reasonable and open to collaboration, consider approaching the conversation as follows:

‍“We’ve seen companies of our size paying 20-30% less for the same subscription and with similar contract terms. Can you help me understand why we’re being quoted so much more?”‍

2. Use benchmarks to time your negotiations

Benchmarks can reveal patterns around vendor discounting, for example the times of year that can drive the highest savings.

If you know that a particular vendor is more flexible at the end of a quarter, for example, you can strategically delay or accelerate conversations to improve your leverage.

3. Establish a BATNA that includes functional alternatives

A strong BATNA (Best Alternative to a Negotiated Agreement) isn’t just about having a fallback vendor in mind, it’s also about considering functional alternatives that meet your business needs.

By benchmarking capabilities across multiple solutions, you can identify options that not only match your technical specifications, but also offer a better fit for your broader business goals.

This gives you more leverage during negotiations, as you can demonstrate a clear understanding of the market, and walk away from deals that don't offer the value or flexibility you require.

You should, however, give yourself enough time to feasibly change providers.

‍By starting negotiations more than 90 days ahead of renewals, companies can secure average savings of 49%, compared to just 19% when conversations are initiated between 30 and 60 days.

4. Negotiate renewals with the future in mind

When negotiating software renewals, it’s crucial that you’re looking beyond the immediate contract and are considering your longer-term needs. This isn’t just about securing better pricing – it’s about ensuring the vendor you’re renewing with is still the right strategic fit.

Benchmarking pricing and capabilities with a long-term view allows you to secure terms that provide both immediate savings and future flexibility.

For example, locking in pricing terms, understanding potential uplifts, and securing flexible provisions – such as adding more users or features – can help mitigate the impact of rising costs and ensure your SaaS stack evolves in line with your business needs.

Ultimately, this approach ties directly into vendor selection. A renewal is a moment to reassess whether the vendor in question remains the best fit for your business. Selecting vendors that can scale with you, adapt to shifting priorities, and minimize risk is just as important as the commercial outcome.

Additionally, it’s worth requesting the removal of auto-renewal clauses, as they have the potential to lock you into unfavorable terms, reduce your leverage during future negotiations, and add unnecessary complexity to your contract management process.

See a full list of terms that can be negotiated within a contract

5. Incorporate capability benchmarking into vendor selection

While price benchmarks are essential, it's equally important to evaluate vendors based on their capabilities.

By incorporating capability benchmarking, you can assess whether a vendor truly meets your current and future needs – beyond just the cost. This involves comparing product features, integration options, performance, and overall fit within your technology ecosystem.

Doing so ensures you're not just negotiating the best price, but also securing a solution that drives long-term value and mitigates the risk of having to switch vendors down the line.

How to access procurement benchmarks

When it comes to obtaining pricing benchmarks, you ultimately have two options.

Obtain out-of-the-box vendor benchmarking data

Many SaaS procurement management providers provide readily-accessible benchmarking data. These tools offer a quick snapshot of market trends, enabling you to get a frame of reference on pricing, and compare what you may have been quoted against what other companies are paying on average.

But while this option can help to identify broad discount ranges, the data is often based on pre-negotiated rates. This means the savings you’re seeing are typically already locked in and won’t necessarily reflect the best possible price available for your specific situation.

While this type of benchmarking data can provide high-level insights, it won’t offer the flexibility, customization, or detailed pricing visibility required for more complex negotiations.

Tailored procurement benchmarking

For more precise and actionable supplier benchmarks, it’s important that you’re leveraging tailored procurement data that’s entirely customized to your organization's unique needs and circumstances. This approach goes beyond generic, one-size-fits-all comparisons and factors in your specific requirements, such as your industry, company size, location, support needs, and the number of licenses you require.

This type of procurement benchmarking not only gives you a clearer understanding of what similar companies are paying, but it also helps you compare vendors based on functional capabilities, such as product features, integration options, and performance.

In addition to this, tailored benchmarking enables you to make far more informed decisions by providing insights into:

• Functional vendor comparisons: This enables you to compare vendors based on the specific features and capabilities you need, ensuring you choose the best fit for your requirements.
• Peer tool adoption: Understand what tools and solutions are being adopted by similar companies in your sector, helping you make smarter decisions when it comes to vendor selection.
• Risk profiling: Assess the risks associated with each vendor, such as financial stability, vendor reliability, and potential service disruptions.

Working with a provider such as Vertice, which offers customized benchmarking services, ensures you get access to real-world, deal-specific insights that reflect your unique business context. With this tailored data, you can secure the best possible terms, mitigate risks, and ultimately drive greater value from your software purchases.

Consider outsourcing negotiations for better outcomes

With the average company now managing 132 SaaS applications and renewal cycles happening continually, it’s increasingly difficult for in-house procurement teams to handle every single negotiation thoroughly.

As a result, tail spend often gets overlooked, and even more strategic contracts miss out on the value they could achieve. This is often because there simply isn’t enough time, focus, or specialized expertise available to assess all aspects of each deal — from pricing to functionality and vendor fit.

Additionally, many procurement teams struggle to benchmark their contracts effectively against the wider market. Without a comprehensive view of vendor performance, pricing, and the potential risks involved, even well-intentioned negotiations may fall short.

For this reason, many organizations are opting to outsource their procurement, not just for additional capacity, but to drive better results.

Some of the specific benefits of outsourcing negotiations include:

• Access to real-time benchmarking data – Any reputable outsourced procurement provider will have access to reliable, real-time benchmarks that can be leveraged to secure the best pricing and terms on any contract. This kind of procurement benchmarking intelligence is fundamental when aiming for optimal results across a large, complex tech stack.
• Substantial time savings – Most procurement teams are under immense pressure to deliver value, but simply don’t have the time to manage complex procurement processes, evaluate vendors, and negotiate each and every contract. Procurement providers take this pressure away by handling as much or as little of these processes for you. ‍
• Access to specialized knowledge and skills – Outsourcing procurement allows you to leverage specialized vendor, market, and negotiation expertise.‍
• Shuttle diplomacy – A neutral third-party negotiator can smooth over complex vendor relationships, facilitating better communication and fostering long-term partnerships without internal biases.‍
• A more streamlined procurement process – The best outsourced providers will integrate advanced procurement technologies, enabling you to automate approvals, track contract renewals, and improve the overall efficiency of your procurement cycles.‍
• Risk mitigation and better contract terms – Experienced negotiators will advise on the best vendors, by assessing vendor stability and performance, mitigating potential risks and securing more favorable terms, reducing future uncertainties and costs.

Outsourcing allows procurement teams to not only handle the sheer volume of negotiations but also to refine their approach, ensuring that each deal is optimized for both cost and long-term value.

See how one company saved 115 hours on negotiations in the space of a few months

‍Using procurement benchmarks to drive strategic value with Vertice

Procurement teams today need to move beyond a price-only mindset. The best outcomes come from balancing cost with fit, risk, and overall business alignment.

At Vertice, we provide a white-glove procurement benchmarking and negotiation service built specifically for time-strapped procurement leaders. Unlike platforms that offer static data and leave the heavy lifting to you, we manage negotiations end-to-end.

Our expert buyers are in-market every day, negotiating live deals with the same vendors you're working with. We know which pricing levers to pull, what discounts are achievable, and when to push – all tailored to your unique circumstances.

But it’s not just about price. We optimize contract terms, flexibility, and structure to ensure you're not only saving money but also gaining long-term value and reducing operational risk.

As a procurement orchestration platform, we help your team become more efficient, make smarter decisions, and drive strategic business value.

Why not take self-guided tour of the platform yourself to learn more about our capabilities and understand what makes Vertice the ideal procurement partner.