Insights / Article
Contract management · 5 min read
The quiet clause inflating your cloud and SaaS bills
Over a multi-year term, uncapped indexation adds up faster than most budgets allow for. Here's how it happens, and how to negotiate a hard cap.
As software suppliers shift to cloud and consumption models, one contractual mechanism has become very common: the uncapped annual price adjustment.
How indexation compounds
Multi-year agreements once carried fixed pricing. Today, many tie annual increases to CPI or RPI plus an extra margin. Left unmanaged, those uplifts compound year after year, turning an economical deal into an unbudgeted drain.
Three safeguards worth insisting on
Cap it: avoid an open-ended CPI link and negotiate the lesser of CPI or a fixed ceiling. Make it reciprocal: if prices index up, they should index down too. Tie it to performance: a supplier missing its SLAs could forgo its uplift.
A proactive review ahead of each notification window lets you challenge unjustified increases before they reach an invoice.
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