"A license is negotiated once. Maintenance, version upgrades, add-on modules and exiting the contract are paid for years."
The issue: the quote is only the visible part
When choosing a solution, attention goes to the purchase price. Yet most of the cost plays out after signing, over the whole life of the solution.
Seen from the other side. On the vendor side, a discount on the license is recovered through maintenance, add-on modules and renewals.
The 3 hidden costs: what the quote does not say
Three mechanisms that drive up the total cost after signing.
- The license metric. Users, cores, transactions: a poorly chosen metric makes the bill grow with usage.
- Indexed maintenance. Calculated on the list price and raised every year, with no cap.
- The locked-in exit. Proprietary format, no reversibility clause: switching costs more than staying.
The method: lock in Day 1
Four points to negotiate before signing, not at the first renewal.
5-year TCO: compare the total cost
Licenses, maintenance, infrastructure and services, projected over the full lifecycle.
Metric: aligned with actual usage
Simulated on your 3-year volumes, with price tiers fixed in the contract.
Maintenance: capped increases
Calculated on the net price, capped indexation, SLAs backed by penalties.
Reversibility: a written exit door
Data returned in an open format, transition assistance, quantified timelines.
The decision-maker's reflex: negotiate the exit before the entry
Reversibility is negotiated before signing: it is the only moment you have leverage. Does your current contract really allow you to leave?
Next episode: large consortiums, or how to drive shared accountability across multi-party ecosystems without friction.
The series "Selecting and choosing IT solutions"
Digital transformation: insights on selecting and choosing IT solutionsEpisode 1
Consulting vs integration: why handing governance to your integrator is a strategic mistakeEpisode 2
The art of the RFP: proof before promiseEpisode 3
Independent testing & PMO: the shields of your budgetEpisode 4
Licenses & contracts: the hidden price of Day 1
Large consortiums
Digital, Data & AI Strategy
Data & AI roadmap, architecture choices, data governance and high-ROI use cases.
Fakhri Essedik
Founder of EDX Advisory
For more than 25 years, Fakhri Essedik has helped executive teams and CIOs steer major Digital, Data & AI programs across Europe, Africa and the Middle East.