Do you enjoy seeing your gym membership go up 20% after the gym "invested" in a whole new set of Nautilus machines when you only use free weights?
Yeah, me neither.
One of the more frustrating aspects of negotiating a renewal with a market data or information services vendor is the Service Enhancement argument which goes something along the lines of:
"As you look at your investment for next year, we'd like to highlight several additional content sets we've added to your service".
There's so much wrong here.
I am being asked to pay for services I didn't actually contract for. IOW - the value of the service is based on the composition of the service when I subscribed to it. The notion that it's now "worth" more because a vendor added services I didn't ask for (and for which I haven't established a value proposition) is unproven at, and at worst, disingenuous.
Particularly galling, of course, is when a vendor tries to justify a price increase based on service enhancements that haven't even taken place yet.
Push back on these arguments. How? Point out that:
1) I didn't ask for the service addition and my value proposition is based on the product without the enhancement;
2) I have no way of establishing the value of the new service, particularly if it's one promised and not yet actually released.
3) Even if, as vendor-supplied data suggests, it was used by subscribers, this alone is unpersuasive: we didn't market the enhancement internally, train users on it, or otherwise systematically calculate an ROI for it.
For claimed service enhancements during your current contract period:
Tell your vendor you're happy to look at it on a trial basis, and require they ring fence access to the service to select pilot users so you can determine the actual value of the enhancement.
But the vendor will argue: the enhancements can't be carved out separately - they're embedded in the existing service.
Reply, that's fine, but how can I know what portion of product usage is based on these enhancements? When were they made? How can you claim there's provable value if the new service/content is commingled with the content set you originally contracted for?
Tell your vendor you're happy to properly consider the enhancements over a full contract period during which you can conduct a proper evaluation, and then pay more should it be worth it, but you won't pay for it for this renewal.
For service enhancements promised for the next contract period:
Absolutely put your foot down on this. Product development and go-to-market cycles are wildly unpredictable. A March release of an enhancement may well be pushed to July. The functionality may be limited or buggy. You won't pay for a service that doesn't exist yet. You won't subsidize their product capex. Period. Would you take out a mortgage on a home that isn't on the market yet and pay interest on an asset you don't own? The notion is preposterous.
Pay for only what you need. Unsolicited product enhancements need to prove their worth before you pay for them.
- Kevan Huston