The Salesforce Master Subscription Agreement explained
Many of the small and medium-sized businesses that sign up for Salesflare come straight off a Salesforce contract… or are still locked into a contract for some time.
That’s because if you don’t read a Salesforce contract well, you will inevitably miss a lot of details in the fine print that you wouldn’t expect to be in there.
We’ll break it down for you in short what Salesforce’s Master Subscription Agreement stipulates and how it works out in practice (although we obviously still recommend you to read it yourselves; this is not legal advice), illustrated by some concrete customer experiences (aka horror stories).
Here’s a short summary:
- You’ll commit to paying Salesforce no matter what happens
- If you fail to pay, interest fees and deletion threats can quickly follow
- Even at renewal, canceling or changing the Salesforce contract is difficult
- The price will keep going up (by 10% on average)
Want to know how and why exactly? Let’s get into it. 👇
1. You’ll commit to paying Salesforce no matter what happens
Going bankrupt? Downsizing? Not using your licenses at all? You’ll still have to pay up.
A Salesforce subscription usually isn’t cheap. To make up for that, account executives will most likely offer you a discount if you commit to a contract that includes more years, more seats and/or more products.
Committing to a Salesforce contract of 3 or 5 years is very common. But it’s also extremely dangerous, because:
- You will pay for what you don’t use
- You can’t decrease your amount of licenses
- And you won’t be able to cancel your Salesforce subscription or get a refund
Think it won’t be that bad? Or that it sounds like outdated business practices?
Here’s what Salesforce’s Master Subscription Agreement (June 2020 version) stipulates:
MSA 5.1: “Fees. Customer will pay all fees specified in Order Forms. Except as otherwise specified herein or in an Order Form, (i) fees are based on Services and Content subscriptions purchased and not actual usage, (ii) payment obligations are non-cancelable and fees paid are non-refundable, and (iii) quantities purchased cannot be decreased during the relevant subscription term.”
You read that right. It doesn’t matter whether you use any of it at all. You need to pay, you can’t cancel, you can’t decrease your quantities purchased... and nothing will be refunded.
Just read what this company shared (complaint in July 2018 with the Better Business Bureau):
“My experience is the same as others. Negotiating a contract with a sales rep from Salesforce that promised us the world but came to find out, our cost to finish the product would be over $50,000 additional! We purchased Salesforce for one year, but was told by our rep that five years would lock us in at a lower rate because Salesforce was aggressively increasing prices, to a small business like ours, that quarterly saving was good. At no time was there any warning that we could not end our contract with Salesforce. We signed up in December 2017 and to this day, we have NEVER used Salesforce. We continue to pay over $9,000 a quarter for a product we can’t use, nor can we afford to complete.”
Technically, it’s part of the Master Subscription Agreement, but that doesn’t help this business out of their misery of course.
Now, even *if* you’ve initially started out actively using all the Salesforce licenses you bought, every entrepreneur knows that your business situation can change quickly, especially during a contract term of 3 or 5 years.
And don’t be mistaken: when things change for worse, you’ll probably still be paying your Salesforce contract. This can turn out to be a heavy burden to bear.
It’s an especially hard pill to swallow for young businesses, as this startup attests (complaint in December 2017 with the Better Business Bureau):
“Salesforce is a terrible company with which to do business. Startups in particular, STAY FAR AWAY FROM THEM. SF sold my company a contract that (at the time) represented a larger financial obligation than the company had raised in funding! They also included a clause saying that after 2 years, payments would become due annually rather than quarterly. Oh, and did I mention they locked the company into a 5 year deal, all under the guise of "the best pricing." They have refused to reduce our number of seats; they have refused to work with us, deferring payments for a few months; they have refused to do anything to adjust the contract in the least. In fact, they would rather put us out of business and collect $0, than to adjust the contract and allow us to continue to be a paying customer. Blind adherence to the letter of their one-sided contracts. The 800lb gorilla takes advantage of the young upstart. Shame on you Salesforce.com. I will never do business with you again.”
But... there must be logical exceptions, right? What if you effectively go bankrupt, sell, or liquidate the company? Will they be more lenient?
Just have a look at article 11.4 of Salesforce’s Master Subscription Agreement (plus the second part of article 11.3, to which it refers):
MSA 11.4: “If this Agreement is terminated by SFDC in accordance with the “Termination” section above, Customer will pay any unpaid fees covering the remainder of the term of all Order Forms to the extent permitted by applicable law. In no event will termination relieve Customer of its obligation to pay any fees payable to SFDC for the period prior to the effective date of termination.”
MSA 11.3: “Termination. A party may terminate this Agreement for cause (i) upon 30 days written notice to the other party of a material breach if such breach remains uncured at the expiration of such period, or (ii) if the other party becomes the subject of a petition in bankruptcy or any other proceeding relating to insolvency, receivership, liquidation or assignment for the benefit of creditors.”
Read also what happened to these customers when they sold their company (complaint in February 2018 with the Better Business Bureau):
“Whatever you do, do not use this company as your CRM. They lock you into contracts and if you are done with their service there is no getting out. We sold our company and had one year left on our 3 year contract. They would not work with us to get out of it or pro-rate it for us. I guess ultimately it is our fault for signing a 3 year contract but companies like this trap you. They get their money whether you need their services or not. It is a travesty that companies and contracts like this exist. They make money regardless of use of their services. I will never recommend or use their service again. Hope this helps other small businesses in their decision on a CRM.”
Moreover, the whole arrangement with locking in a minimum contract is quite one-sided, because if, alternatively, things change for the better and you need more than you’ve contracted, Salesforce will automatically make you commit to more.
This is stipulated in article 3.2 of Salesforce’s Master Subscription Agreement:
MSA 3.2: “If, notwithstanding SFDC’s efforts, Customer is unable or unwilling to abide by a contractual usage limit, Customer will execute an Order Form for additional quantities of the applicable Services or Content promptly upon SFDC’s request, and/or pay any invoice for excess usage in accordance with the “Invoicing and Payment” section below.”
2. If you fail to pay, interest fees and deletion threats can quickly follow
Think you’ll always have the option not to pay? Think twice.
If you don’t pay up all those fees you’ve (maybe automatically) committed to by the due date, for instance because you’re waiting to pay the fees while discussing them, you will start racking up interest fees very fast . This happens at the rate of 1.5% per month, which is about 20% per year.
MSA 5.3: “Overdue Charges. If any invoiced amount is not received by SFDC by the due date, then without limiting SFDC’s rights or remedies, (a) those charges may accrue late interest at the rate of 1.5% of the outstanding balance per month, or the maximum rate permitted by law, whichever is lower, and/or (b) SFDC may condition future subscription renewals and Order Forms on payment terms shorter than those specified in the “Invoicing and Payment” section above.”
Or worse: you may be strong-armed into paying immediately, even when in the middle of a negotiation (complaint in November 2019 with the Better Business Bureau):
“THEN, on Jan 10, 2019, we received an email stating that we were responsible for paying the outstanding invoice of $40,000 within 5 DAYS otherwise our organization would be shut down. Knowing FULL WELL that if our salesforce account went down, we’d be out of business, we are now being manipulated into paying the full balance under threat of being shut down within 5 days. We negotiated for over 5 MONTHS without resolution, who could possibly believe we’d achieve a resolution within 5 DAYS????”
The Salesforce agreement officially states that 30 days’ written notice is given, but most real life complaints we have heard or could find rather mention 5-7 days instead.
3. Even at renewal, canceling or changing the contract is difficult
Playing it by Salesforce’s rules? It’s not as easy as you might think.
When canceling or changing a Salesforce contract, timing is crucial, as stipulated by article 11.4 of the Master Subscription Agreement:
MSA 11.2 “Except as otherwise specified in an Order Form, subscriptions will automatically renew for additional periods equal to the expiring subscription term or one year (whichever is shorter) , unless either party gives the other written notice (email acceptable) at least 30 days before the end of the relevant subscription term.”
The key here when canceling your Salesforce subscription is getting your Account Executive to help you, but that can be quite hard according to customers (complaint in December 2017 with the Better Business Bureau):
“I have been working with Salesforce for almost 3 years. The reports of being held hostage are absolutely correct. I have been trying to downgrade to a different version and cannot get anyone to help me with this, all my Account Executive (AE) does is send me emails to links, I have tried calling billing, sales and everyone leads me back to my AE, whom I keep saying is not helping me. No one can cancel a contract or upgrade a contract but her and it will auto-renew without you being able to stop it. This is like the gym membership you can’t get out of! I would never recommend this system to anyone. Just run away as fast as you can before you get sucked into a contract and a system you don’t want or need.”
And if Salesforce doesn’t reply to your request for cancellation, you will probably keep paying in the meantime with the added chance that you might not see most of that money back (complaint in April 2019 with the Better Business Bureau):
“I requested that our account be canceled and billing ceased in July of 2018, yet Desk.com (Salesforce.com) continued to bill us monthly for $150.00 each month. I finally received a response from them after contacting them countless times, and they agreed to refund one month and close our account. They have essentially stolen $1k+ in payments from us, and even after emailing them several times since hearing back from them, I have not received a single response.”
Other people report that Account Executives (AEs) disappear or become fully unresponsive as soon as you’ve signed the Salesforce contract, they report AEs being replaced by other AEs who claim they’re not responsible for the initial agreement, and so on.
This is just one of the stories you can read on Trustpilot:
“Wanted to give the software a try and activated an online account. After a couple of months I found the software too complex and slow and wanted to cancel the subscription. There is no online option, eventually I got in touch with sales who told me I needed to contact 'my' salesperson in order to discuss a cancelation ?!?! No one called back, no follow up. Today, 4 months, various calls, chats/mails I finally got a response via email that my contract would be cancelled. This is no 2019 approach or anything you would expect from a customer facing company.”
In short: when looking to cancel your Salesforce subscription, put reminders in place, start contacting them way ahead of time, and be prepared for an uphill battle.
4. Inevitably, the price will keep going up (by 10% on average)
Deals will expire. Products will change names. Prices *will* go up.
As explained above, your account executive will probably try to upsell you to a longer Salesforce contract, more seats, and more packages.
During a conversation I had with Salesforce executives some years ago, one of them put it as follows (paraphrasing based on recollection):
“If you’re buying a car as a young couple, you might think about getting a smaller car, because it’s the cheaper choice and it's what you need right now. But, you’ll probably get kids, so why don’t you immediately get the SUV. It might be a bigger investment, but it’ll immediately allow your family to grow in the future.”
You might hear a message like this one. And it’ll probably be accompanied with the promise of discounts when you commit to more. But… these discounts *will* expire. And you *will* most likely pay what you’ve committed for.
Actually, renewals usually come with a whole series of surprises:
- Prices for the products you use go up.
- According to SF Negotiator, products often change names and/or are re-packaged to make any prices you’ve agreed upon completely void. The same applies to upper limits on price hikes you’ve established during negotiation of your Salesforce contract - if you’ve done that at all.
- Lowering commitments at renewal will result in re-pricing.
This is what Salesforce’s Master Subscription Agreement states regarding the latter:
MSA 11.2: “Except as expressly provided in the applicable Order Form, renewal of promotional or one-time priced subscriptions will be at SFDC’s applicable list price in effect at the time of the applicable renewal. Notwithstanding anything to the contrary, any renewal in which subscription volume or subscription length for any Services has decreased from the prior term will result in re-pricing at renewal without regard to the prior term’s per-unit pricing.”
If you’re still giving Salesforce the benefit of the doubt on this matter, here’s what SF Negotiator states:
“The Salesforce machine has been developed in a way that promotes and incentivizes year-over-year growth in your account. This may be common sense to some, however, what you may not expect or realize is that prior to any renewal discussions from even occurring, Salesforce has already booked (planned for) a 10% increase in your account.”
If you’re going to sign a Salesforce contract and want to plan your budgets right, you might as well plan that 10% budget growth (or more) right from the start. Because they might have done that already too.
No other CRM will fit your business?
If you’re working in a large enterprise, you’ll need an enterprise CRM. And much of the above will be what you’ll have to face, whether you use Salesforce, Microsoft Dynamics, SAP CRM, or an Oracle CRM On Demand.
If you’re dead set on Salesforce, check out the tips by Gartner and SF Negotiator / The Negotiator Guru on how to negotiate your contract properly. It’s definitely not an option to not negotiate well.
If you’re working in a small or medium-sized business however, Salesforce will most probably not be a great match for your business (lots about that on Trustpilot).
You won’t regret it 😘
If you have any more questions, hit me up in the comments or send a message to the team on the chat that you can find on our homepage.
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