# 4 Software Renewal Tips To Optimize Your Technology | Capterra > Don’t commit to a new software subscription without reviewing alternatives. Capterra and Gartner research offers four tips to find the best possible system before renewing. Source: https://www.capterra.com/resources/software-renewal-tips --- Software ImplementationEntrepreneurs/Owners # 4 Software Renewal Tips To Optimize Your Technology Written by: Amita Jain Amita JainAuthor Senior Writer Experience I've been writing for Capterra since August 2021, with the goal of becoming a trusted voice in the finance technology market. I have... [See bio & all articles](https://www.capterra.com/resources/author/ajain/) and edited by: Rina Rai Rina RaiEditor Rina is a senior editor at Capterra. She has close to a decade of experience creating and editing content, especially for the IT, software, and finance domai... [See bio & all articles](https://www.capterra.com/resources/author/rina-rai/) Published July 2, 2020 | Updated on August 14, 2024 5 min read Table of Contents - [Tip #1. Treat each renewal as a new software search](#tip-1-treat-each-renewal-as-a-new-software-search) - [Tip #2. Prioritize features to rightsize and save money](#tip-2-prioritize-features-to-rightsize-and-save-money) - [Tip #3. Don’t skip homework](#tip-3-dont-skip-homework) - [Tip #4. It’s OK to avoid long commitments](#tip-4-its-ok-to-avoid-long-commitments) - [How to put this advice into action](#how-to-put-this-advice-into-action) ## Use your renewal period to explore the software market and discover new functionality for your business. Your software subscription period is almost over. Do you renew that subscription without looking around the market for better options? Even if you’re happy with the system, renewal is an opportunity to confirm that you have the best software available. Recent research from Gartner [\[1\]](#sources) and Capterra’s 2024 Software Buying Behavior Survey[\*](#methodology) reveal how businesses approach the decision to renew tech subscriptions. With budgets getting tighter and technology evolving faster than you can hit “upgrade,” these insights are more crucial than ever. We’ve analyzed these results to offer four renewal best practices to follow when you reach the end of your software contract. ## Tip #1. Treat each renewal as a new software search Don’t casually renew your current software license without investigating new options. It may be reasonable to simply renew, but you could be missing out on new, valuable functionality that has emerged recently. Over 60% of respondents in Gartner’s survey say they frequently investigate alternatives, either at an in-depth or a cursory level, before renewing software subscriptions. The vast majority of companies use each renewal period as a chance to look around at other options—primarily as a cost-reduction opportunity or because their needs are outgrowing the functionality their existing provider offers. [\[1\]](#sources) Pay attention to the signs that indicate that you need to find new software. If even one of these apply, you should review your options in the software market. Take action Kick off the renewal process sooner. Fifty-eight percent of respondents begin this process about four months before their contract expires. But Gartner says if your software contract is complex and involves mission-critical functions or many different products, you may need a 24-month or longer cycle for renewal management, planning, and negotiation. [\[2\]](#sources)  By starting this activity months in advance, you:  - Send a message to your existing provider that you’ve expectations that need to be met. - Give your teams plenty of time to voice any concerns or share the value derived from it. - Get time to conduct market analysis and explore other competitive offerings out there. - Have time for multiple rounds of negotiations on both pricing and contract terms without disrupting existing workflows. Stay informed about your upcoming renewal dates with [contract management software](https://www.capterra.com/contract-management-software/). You'll get timely nudges, renewal reminders, and even suggestions for your SaaS renewal strategy. ## Tip #2. Prioritize features to rightsize and save money We know that most businesses evaluate new software during each renewal period, but what exactly do they do?  Capterra research shows three in five businesses plan to upgrade software they’ve recently purchased to add more functionality.[\*](#methodology) The other main reason is scaling up the existing license to manage more projects or tasks (versus completely replacing existing software or purchasing a new tool). Tweaking the existing software, instead of making wholesale changes, is a great way to get more value from your investment while potentially saving costs and ensuring the tool fits just right as you grow. As you review new functionalities, use this chance to consider which features of your software are truly driving your goals in this new business environment and determine which functionality you may not need now. Software providers ultimately want to retain your business for as long as possible, so they have the motivation to demonstrate the value of your relationship and deliver the specific set of features you want, even if you’re paying less. Take action Take a look at your history with the current software. Break down features into three buckets: **required**, **valuable**, and **optional**. If you’re looking for a new feature, check if your vendor offers it and what upgrade options they have available. Also, request them to show how pricing could change if you remove some optional features. Renewal is also a great time to review your need for support. After a year or so with a new product, you should be able to reduce spend on support services as your team gains proficiency. Look at past records of your team’s interactions with the support team. If you haven’t been using their services very often, consider downgrading to a lower-priced maintenance option.  Use [Capterra’s comparison tool](https://www.capterra.com/resources/capterra-software-comparison-tool/) to evaluate similar software options, their features, and subscription prices. Check if competitors are offering comparable features and support services at similar price points to make an informed decision about whether to switch or retain. ## Tip #3. Don’t skip homework Thorough preparation pays off when it comes to software renewals. Almost all businesses (98%) conduct two to three due diligence activities before renewing a software contract. [\[1\]](#sources)  That said, companies are split on how they should approach this task. Half have a formal process that kicks in at a specific time before renewal, while the other half take a more flexible path. This split often reflects differences in company size, industry, or work culture. But no matter the approach, both groups complete, on average, the same number of tasks. Here's what these companies are doing: Remember, whether you're a stickler for formal processes or prefer to keep things flexible, the key is doing the homework. A bit of digging now can save you from buyer's remorse later—or even lead you to uncover some cool new features you didn’t even know you needed! Pro tip Request the vendor’s latest security audit or compliance certifications (e.g., GDPR, SOC 2). Verifying these upfront reduces risk and builds customer trust. ## Tip #4. It’s OK to avoid long commitments Fifty-one percent of buyers commit to contract terms of a year or less. [\[1\]](#sources) Back when software was installed only on local computers, agreeing to a multiyear contract made sense. Switching to a different system could take months to get up and running, but today’s cloud-based software puts more power in the hands of buyers. Software-as-a-Service (SaaS) products offer a more attractive option for small and midsize companies—they’re cheaper to adopt with subscription pricing, and the flexibility means you can access the system from any device with a web browser. This makes switching among a few different systems much more simple. Each vendor will have their own policies for contract lengths and often offer cheaper packages for commitments of at least a year, so make sure to understand your options. Take action Review your current software contract to understand your company’s obligations when terminating or renegotiating for renewal or upgrade. Pay close attention to these key terms that may enable or prevent you from terminating: - **Termination for convenience or cause:** ”For convenience” means you can terminate for any reason, and “for cause” means you can terminate only if the provider violates the agreement. - **Early termination fees:** Vendors will often include fees and other penalties for ending a contract early that offsets the software provider’s costs for losing a client.  - **Post-termination requirements:** When terminating a software agreement, whether early or not, you may have some obligations. For example, the contract should cover how to collect and remove all your data from the system. Do you feel like you're in a tough spot where you have almost no choice but to continue with the previous provider because the contract terms are very tricky? By showing quotes from other providers, you can gain leverage during renewal negotiations. This approach will help you make a deal that saves you money, gives contractual concessions, and offers better support, too. ## /CASE STUDY ## A law firm's tech upgrade journey Benson Varghese, [\[3\]](#sources) a criminal defense attorney and the founder of a law firm, wanted to streamline his organization’s messy tech stack. "_Over time, you end up with all these different tools, and before you know it, you're paying for the same features twice,_” says Varghese. He decided it was time to clean up and consolidate duplicate applications but without losing any crucial functionality. “_While renewals can seem intimidating, a little strategic planning goes a long way,_” shares Varghese. The toughest part for him was figuring out how all the pieces fit together and whether his organization could migrate their existing data.  In his game plan, he focused on buddying up with the existing software provider and working closely with their account renewal manager. “_Our account manager set up multiple demo meetings to help us visualize new workflows and even provided consultations as we tested new features_.” For anyone staring down an expiring contract, Varghese has three suggestions: - **Start the renewal chat early.** Don’t wait for that “time to renew” email. Make it a regular practice to see if the software is still doing what you need.  - **Lean on your vendor relationships.** Software providers want you to succeed with their products. "_See them as partners, not just salespeople,_" Varghese says. "_The more they understand your business, the better they can tailor solutions for you._" - **Negotiate with knowledge.** When it’s time to discuss terms, come prepared with information. Show how much you use the software and explain which features are necessary for you. It’ll give you a much better chance of getting a good bargain. Want to kickstart your renewal process? Consider [a free consultation with Capterra software advisors](https://www.capterra.com/our-story/#:~:text=Need%20help%20finding%20software%20or%20services%3F). They can fill you in on what's new in your software category, help you explore alternatives, and create a plan to optimize your tech stack—all of which can give you an edge in renewal negotiations.  ## How to put this advice into action Renewal time is an excellent opportunity to review different systems. But if you’re happy with your current software, your most straightforward move is to renew. But do so with the mindset of getting more value for your spending. Use these tips as a guide for either situation: - **If you choose to stay with your current system**: Consider which features or services you can afford to remove to rightsize the system and save money. Then, review our [steps for a successful renewal negotiation](https://www.capterra.com/resources/steps-for-software-renewal-negotiation/). - **If you decide to get another system**: A year out from the end of your contract, gather peers and employees to understand users' pain points with the current system. Then, perform research to identify alternatives that can eliminate those pain points. Review our [ways to get buy-in for new software](https://www.capterra.com/resources/ways-to-get-buy-in-for-new-software/). Stay up to date with the latest trends in your software category through [Capterra resources](https://www.capterra.com/resources/). Learn how to make the best decisions for your technology needs and budget. * * * **Survey methodology** _\*Capterra’s 2024 Software Buying Behavior Survey was conducted to understand the composition, triggers, budgets, and challenges of software buying teams at global businesses across industries and sizes. We sought to uncover the software types these buyers are adopting, their evaluation methods, and what factors convince them to make a purchase, from vendor reputation and sales team interactions to content materials and user reviews._  _The survey was conducted online in August and September 2023 among 2,499 respondents from the U.S., U.K., Canada, Australia, France, India, Germany, Brazil, and Japan, with businesses across multiple industries and company sizes (5 or more employees). Respondents were screened to ensure involvement in software purchasing decisions._ Sources 1. [Top Strategies To Ensure Renewals in a B2B Subscription Model](https://www.gartner.com/document/4614699?ref=solrAll&refval=420607937&), Gartner 2. [Tool: 5-Phase Checklist for Tier 1 Software and SaaS Enterprise Contract Renewals](https://www.gartner.com/en/documents/4004360), Gartner 3. [Benson Varghese](https://www.linkedin.com/in/bensonv/), LinkedIn * * * ### Was this article helpful? * * * ## About the Authors [### Amita Jain](https://www.capterra.com/resources/author/ajain/) Amita Jain is a senior writer for Capterra, covering finance technology with a focus on expense management and accounting solutions for small and midsize businesses. Her work has been featured in Careers360, among other publications. [### Rina Rai](https://www.capterra.com/resources/author/rina-rai/) Rina is a senior editor at Capterra. She has close to a decade of experience creating and editing content, especially for the IT, software, and finance domains. Passionate about minimalist storytelling, she prioritizes breaking down complex industry jargon into engaging stories accessible to all readers. Rina holds a postgraduate degree in mass communication and journalism and a bachelor's degree in English literature. She started her career as a features writer for The Times of India, India’s... ### RELATED READING - [Choosing Project Management Software? 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