How to negotiate with tech monopolists

To defend against the pricing and contractual dictates of SAP, Microsoft, and others, companies need a sophisticated negotiation strategy.

Corporate competitiveness is impossible without digital transformation, but that transformation comes at a cost. Companies today consume far more data than in the past, driving demand for digital tools and software from the tech giants: software licenses, cloud services, web servers, and more. Spending on software, applications, and cloud-based services already accounts for up to 30 percent of total corporate costs, and that share is still climbing.

Tech corporations exploit their market power to push through price increases

According to expert estimates, companies’ total IT spending will grow by approximately seven percent annually in the coming years, outpacing general inflation and the average revenue growth of most businesses. This dependency grants often-monopolistic providers like Microsoft, SAP, Salesforce, and Broadcom with VMware enormous market power, which they exploit mercilessly to impose price hikes.

Microsoft, for instance, is raising prices again. From July 2026, the US software giant will charge between 5 and 33 percent more for its Office 365 and Microsoft 365 suites. At the same time, costs for Power BI and Teams are rising by as much as 40 percent. SAP tells a similar story: the migration to its new S/4HANA system brings substantial transition costs, and the Walldorf-based software company already raised its maintenance and support fees by up to five percent last year. Salesforce, the CRM specialist, similarly raised prices on many of its products by an average of six percent in the past year.

The lock-in effect makes switching to alternative providers difficult

Procurement teams must therefore prepare thoroughly for negotiations with tech giants, otherwise they will find themselves trapped in a cost spiral from which there is no easy escape. Negotiations with tech corporations are fundamentally different from purchasing a machine or booking a service, where multiple competing vendors typically exist. In those cases, precise tendering processes or auctions allow buyers to find the best offer at optimal terms.

That approach does not work with tech monopolists. They do not compete directly against each other, and their IT solutions are barely comparable, making objective evaluation difficult. And once a company has committed to a vendor, switching to a competitor becomes unattractive due to high transition costs or technical barriers. Customers become dependent on a single provider. This so-called lock-in effect grants the tech corporation additional negotiating leverage.

Complex contract structures and high profit expectations

Tech monopolists also operate under very high internal profit expectations, which leave their sales teams little room for a genuinely partnership-oriented approach to customer relationships. Compounding this is the sheer complexity of contract structures, which vendors use to their advantage. License audits are a prime example: customers can easily find themselves in a state of under-licensing without even realizing it, resulting in costly backdated payments.

Yet companies are not powerless against monopolists. By applying four key principles, it is possible to move even dominant vendors toward meaningful concessions.

Negotiate strategically, not reactively

1. Comprehensive Total Value of Ownership (TVO) assessment. This means capturing all relevant monetary and non-monetary dimensions of your negotiating options, including potential alternatives, negotiating levers, consequences, and incentives, using a Total Value of Ownership framework. The goal is to make options genuinely comparable and establish a solid foundation for complex decisions.

Consider this example: a company facing an SAP S/4HANA transformation is evaluating a move to SAP Rise (Plan A). A realistic alternative would be continuing with S/4HANA on-premise (Plan B). A structured evaluation of both scenarios, covering total cost of ownership, flexibility, integration requirements, technological future-proofing, SAP dependency, and access to innovation, creates a defensible decision basis.

The vendor’s perspective matters here too. If the customer derives only moderate value from the cloud migration while SAP benefits substantially, both financially and strategically, a negotiating imbalance emerges. A well-developed, operationally viable Plan B acts as an economic counterweight. The more credible that alternative, the more room there is to negotiate better commercial terms under Plan A.

2. A holistic negotiation roadmap. Rather than entering isolated, one-off negotiation rounds, companies should develop a comprehensive, multi-stage negotiation and communication strategy before talks begin, one that anticipates possible escalation steps and accounts for the tech vendor’s specific incentive structures. The guiding principle: structure beats spontaneity. A clear roadmap beats reactive improvisation.

3. Negotiation mandate before the first meeting. The negotiation team should secure clear commitment from senior leadership and all relevant cross-functional stakeholders, including IT, business partners, and procurement leadership, before engaging the tech vendor. This commitment must cover the consistent deployment of negotiating levers and agreed responses to various outcome scenarios. The timing is critical: this internal alignment must happen before negotiations begin. Internal buy-in prior to the first external meeting is the single most important precondition for external impact.

4. Willingness to escalate and controlled confrontation. Cautious maneuvering gets companies nowhere. Success depends on addressing objectives and specific demands early and clearly communicating the consequences if the tech vendor refuses to budge. Establishing a credible posture at the very first negotiation meeting significantly increases the likelihood of reaching an agreement in monopoly negotiations.

The decisive prerequisites for successful negotiations with tech giants are deep expertise in technology and license optimization, combined with the disciplined execution of a negotiation strategy built on these four principles. Companies that invest in this approach are no longer at the mercy of pricing and contractual dictates; they actively steer outcomes in their favor.

Alperen Can. Head of Bilateral Negotiations, Negotiation Advisory Group

Julia Friedl Associate Partner, Negotiation Advisory Group

Katharina Weber CEO, Negotiation Advisory Group