Why SAP Price Uplift Rates Matter
Annual uplift rates – the percentage by which SAP increases its support or subscription fees each year – may seem small, but they have a big impact over time.
Even a “mere” 3–5% hike each year can substantially inflate your IT spend.
For example, a support cost of $10 million today would grow to $11.6 million in five years with 3% annual uplifts, versus $12.8 million at 5%. That extra 2% means paying roughly $1.2 million more by year five.
These incremental hikes can quietly erode the discounts you negotiated. Even if you secured a favorable rate up front, unchecked annual increases will steadily chip away at those savings.
After a few renewal cycles, you might find yourself paying close to the list price despite that initial deal. That’s why understanding uplift mechanics before you sign or renew is crucial. It allows you to forecast long-term costs and avoid surprises.
From a budgeting standpoint, even a predictable 3% yearly increase outpaces many organizations’ flat or 1–2% IT budget growth. Without planning, support costs can slowly consume a larger share of your budget each year.
Knowing how SAP applies these uplifts helps CIOs and CFOs set realistic multi-year budgets and justify negotiations to limit increases. Read our comprehensive guide to SAP Price Uplifts & Renewal Tactics: Keeping Cost Increases in Check.
Typical Uplift Ranges Historically
Traditionally, SAP (like many enterprise software vendors) targeted annual maintenance increases around inflation levels – roughly 2–4% per year.
In practice, for a long stretch, SAP actually kept on-premise support fees flat. From about 2012 through 2022, SAP imposed virtually no annual uplifts on support – effectively a price freeze for a decade. Many customers have become accustomed to stable maintenance costs year after year.
However, inflationary pressure and market norms eventually caught up. In 2023, SAP broke the long freeze with an average 3.3% increase in on-premise support contracts.
This hike – the first in years – was justified by SAP using regional Consumer Price Index (CPI) inflation rates (capped at 3.3%). It signaled that modest yearly uplifts were back on the table.
Regions with lower inflation saw smaller increases, while high-inflation regions would have exceeded 3.3% if not for the cap.
SAP’s model thus far has been to link support fee adjustments to local CPI, but with a global cap to prevent extreme jumps.
Historically, 3% was a common figure in many contracts (either explicitly or as an expectation), so the 2023 adjustment was roughly in line with what many considered “typical” for maintenance inflation.
Cloud subscription contracts have also featured annual uplifts, often in the 3–5% range. Unlike on-prem support (which was fixed at 22% of license value and seldom changed for years), cloud services tend to bake in yearly price escalators.
For instance, a Software-as-a-Service agreement for SuccessFactors or Ariba might specify that subscription fees increase 4% at each annual anniversary. Some contracts tie the uplift to an index like CPI, while in others it’s a fixed percentage.
Either way, customers should remember that cloud costs won’t remain flat – they typically creep up each year. What starts as a $100,000 per year cloud service can automatically become $104,000 in year two, $108,000 in year three, and so on, even if your usage doesn’t grow. Over multiple years, these bumps compound and can significantly increase your total spend.
Recent Changes and “Enterprise Support 2025” Policies
In the past couple of years, SAP has significantly updated its support pricing policies.
After the initial 3.3% increase in 2023, SAP announced it would raise the cap on annual uplifts to 5% going forward. In other words, effective 2024, SAP can increase on-premise support fees by local CPI (inflation) up to a maximum of 5% in a given year.
This change took effect on Jan 1, 2024, for all existing SAP support contracts (Standard Support, Enterprise Support, and Product Support for Large Enterprises). SAP signaled that such adjustments will now be an annual decision – customers should expect a price increase announcement each year (typically by Q3 for the following year) as the new normal.
This “CPI-plus-cap” approach marks a clear shift from the old fixed-rate model to an inflation-indexed model. Rather than a flat 3% across the board each year, the increase now varies based on actual inflation (with a cap at 5%).
For example, if local inflation is 2%, SAP might only raise support fees ~2%. If inflation is 6%, SAP will still limit the hike to 5% under the cap. In essence, support fee growth is now explicitly tied to inflation, with 5% as the upper limit (for now).
Enterprise Support 2025 is the label for SAP’s evolving support strategy through the year 2025. Notably, SAP has promised that the list price for Enterprise Support on new on-premise license purchases will remain fixed at 22% of license value until 2025.
This commitment provides short-term predictability for new customers – SAP isn’t raising the base maintenance rate above 22% just yet. The implication is that after 2025, support pricing could be revisited, so it’s a timeline to watch.
Another policy change is that SAP will not increase support fees during the initial period and first renewal period of new Enterprise Support contracts.
In other words, when you sign a new support agreement, your rate stays flat through the rest of that calendar year plus the entire next year (the standard initial period), and it also remains flat for the first renewal year after that. Only once the initial term and first renewal have passed do the annual CPI-based increases begin.
For example, if a support contract starts in mid-2023, SAP would keep the fee unchanged through 2023, 2024, and 2025 (the first renewal year). The first uplift would only occur in 2026. This policy gives new customers a reprieve and is a selling point to counter anxiety about rising fees.
SAP introduced the 5% cap to balance two aims: protecting customers from runaway inflation and still giving itself room to adjust revenue in high-inflation periods.
In the early 2020s, inflation spiked globally (many countries saw 7–9% CPI at the peak). Under the old 3.3% cap, SAP would have been leaving money on the table relative to actual inflation in those regions. Raising the cap to 5% aligns with the reality of “still-high” inflation rates, as SAP described.
At the same time, SAP is aware of customer pushback. The 5% limit is thus a gesture of restraint – especially since some other vendors have tried to pass along even higher increases during recent inflation surges.
Then vs. Now: To summarize the shift, consider the contrast:
- Then (2010s): On-prem support fees were frozen or grew very slowly (near 0–3% at most, and often not annually). Cloud contracts were newer, but many had ~3% annual uplifts baked in.
- Now (2023–2024): On-prem support fees are explicitly adjusted annually by up to 5% based on the CPI. Cloud subscriptions continue to include annual uplifts (generally 3–5%) and require active management at renewal. SAP’s official policies (e.g,. price locks for initial periods and a 5% cap) are now published, whereas before, increases were infrequent and not as formulaic.
Contractual Drivers of Uplift – What to Look For
The exact impact of SAP’s uplift rates on your organization depends on the fine print of your contract. Here are key contractual elements to review:
- Uplift Clause Language: Find any clause about support fee adjustments or price increases. Phrases to look for include “indexed to Consumer Price Index,” “annual adjustment,” or “standard maintenance increase.” This will tell you if and how SAP is allowed to raise fees (e.g. “by local CPI” or “by up to X% per year”).
- Fixed vs. Variable Terms: Determine if your contract specifies a fixed uplift rate (e.g., a flat 3% each year) or if it’s open/variable. Older agreements sometimes locked in an uplift at a set percentage, whereas newer ones often reference CPI or “SAP’s standard support fees,” which are variable. A fixed 3% clause at least gives certainty; a CPI-based clause could mean 2% one year but 5% the next.
- “Standard Rates” or List Price References: Beware of language tying your fees to “SAP standard support rates” or the list price of software. For example, if your deal specifies that maintenance is 22% of the current list price of licenses, SAP could indirectly increase your cost by raising the list prices or adjusting the meaning of the “standard” rate. Ideally, you want your percentage and terms locked to your purchase price, not floating with SAP’s pricing policies.
- Initial Period Protections: Check if your contract includes an initial term during which fees won’t increase. As noted, SAP now generally honors no uplift in the first calendar year-plus of new contracts, but make sure this is spelled out. If you’re in that honeymoon phase, note when it ends so you know when the first bump may hit.
- Timing of Increases: Clarify when and how increases apply. Do they kick in at the start of each calendar year, at your contract anniversary date, or upon renewal? SAP’s recent policy has been to adjust fees with the new year (providing notice mid-year prior). However, your contract might say “fees may be increased upon renewal,” which could be a different month if your support doesn’t align with year-end. Understanding the trigger (calendar vs. contract year) helps you anticipate the timing of any cost changes and budget accordingly. Also, verify any notice period – SAP typically must inform you X months in advance of a price increase, per the contract.
Example Uplift Scenarios
It’s helpful to visualize how different uplift rates play out in real situations:
- Company A (On-Premise): This company pays €10 million in SAP support annually. With a 3% uplift, they would pay an extra €300,000 in the second year (total €10.3 M). By year five, thanks to compounding, their annual support cost would be around €11.6 M – roughly €1.6 M higher than year one. At a 5% annual uplift, the cost in year two jumps by €500,000 (to €10.5 M), and by year five, the annual fee would be about €12.8 M. The difference between a 3% and 5% regime over several years is substantial (over €1 M extra by year five on a €10 M base).
- Company B (Contract Change): This organization had negotiated a contract that capped support increases at 3% per year. However, that contract is expiring, and the renewal will move to SAP’s standard policy (CPI-based up to 5%). If their current annual maintenance is $5 million, they expect a $150k increase per year under the old cap. Now, their next increase could be $250k (5%). That one-year change adds $100k more than anticipated. Over multiple years, if the trend continues, they could end up paying significantly more than their previous trajectory – a wake-up call for their finance team.
- Company C (Cloud Subscription): They subscribe to an SAP cloud service at $100,000 per year. The contract has a 4% fixed uplift clause. So, year 2 will cost $104,000, and year 3 around $108,160. Over three years, this customer pays about $312k instead of $300k if the rate had stayed flat. The compounded increase isn’t dramatic at first, but if this pattern persists over a longer term (say 5–6 years), the subscription cost could be 20+% higher than the original price. This shows why multi-year cloud budgets need to account for these built-in jumps.
- Regional Variance: Consider two SAP customers in different countries. Company X is in a high-inflation economy where local CPI is 5% or more; they will likely see the full 5% annual uplift on support. Company Y is in a lower-inflation country (say CPI of 2%), so they might get a smaller 2% increase. After three years, Company X would be paying over 15% more than originally, whereas Company Y’s costs might be around 6% higher. The gap illustrates how geography and inflation conditions directly affect SAP costs under the new model. If Company X also had no contractual cap, and if inflation spiked above 5%, they could have faced even higher fees without SAP’s voluntary cap in place.
Risks & Strategic Implications
Uncontrolled uplift rates pose several risks and strategic considerations for SAP customers:
- No Cap, No Control: If your contract doesn’t impose a cap, you are exposed to whatever SAP decides (or whatever inflation dictates). In extreme scenarios, an uncapped CPI clause could mean a 7–10% hike in a high-inflation year – a huge hit to the budget. Contracts without explicit limits give SAP a blank check to raise prices annually.
- Eroding Value/ROI: Paying more each year for the same software can shrink your return on investment over time. This is especially problematic if you’re not utilizing new features or if SAP isn’t delivering additional value commensurate with the higher fee. On-premise customers today face this dilemma: support costs keep rising (and will keep rising), yet SAP has declared that new innovations (e.g., certain AI or industry features) will be cloud-only. In effect, some customers feel they’re paying more for maintenance on “steady-state” systems that aren’t evolving. This imbalance can make the ROI of staying on legacy platforms worse each year.
- Budget Creep: Compound increases can significantly eat into IT budgets over a 5–10 year span. A 4% yearly increase means paying roughly 48% more after 10 years (due to compounding). Many organizations can’t afford their support costs, which have nearly doubled in a decade, without making cuts elsewhere. Long-term financial planning is at risk if these uplifts aren’t kept in check.
- Pressure to Migrate: There’s a school of thought that SAP’s aggressive stance on support (higher fees, fewer on-prem perks) is a tactic to push customers toward its cloud offerings (like RISE with SAP). Cloud subscriptions might have high margins for SAP, and the company clearly wants migration. By making on-premise ownership pricier and less attractive (via uplift and feature lockouts), SAP nudges customers to reconsider sticking with the status quo. CIOs should recognize this dynamic: your rising support bill is not just a cost issue, but a strategic nudge from SAP regarding your product roadmap.
- Operational Surprises: If uplift terms and timing aren’t understood, organizations could be caught off guard by a sudden invoice spike. For example, if finance didn’t anticipate that January renewal jump, it could cause scrambling to reallocate funds. Lack of clarity internally about these clauses can lead to unwelcome surprises and even non-compliance with budgeting processes. It underscores the importance of internal communication between IT, procurement, and finance about contract terms.
Mitigation & Negotiation Levers (Preview)
The good news is that customers are not helpless – you can negotiate and plan to mitigate the impact of SAP’s uplift rates.
Here are a few strategies to consider (to be explored in detail in later guides):
- Negotiate a Cap: Push for a hard ceiling on any annual increase. For instance, you might get SAP to agree that support fees “will not increase by more than 3% per year” (or 5%, or whatever you can live with). Having a contractual max protects you in high-inflation scenarios. Even if SAP’s standard policy is 5%, as a strategic customer, you might secure a custom cap below that.
- Lock in Fixed Periods: Try to secure a multi-year freeze or fixed rate period. You could negotiate something like no uplift for the first two years of a renewal, or a flat price for a 3-year term. SAP may be amenable if you commit to a longer renewal or expansion – essentially trading a longer commitment for price protection.
- Benchmark & Challenge: Research local inflation and peer benchmarks when SAP proposes an increase. If your region’s CPI is 2% and SAP still asks for 5%, that’s a point to question and negotiate. Showing data – “our local inflation is only X%” – can support your case for a smaller uplift. SAP sometimes adjusts by region; you can advocate for the lower end of the range if you’re armed with facts.
- Timing Matters: Align your renewal timing with economic conditions if possible. If you have flexibility, try to renew during a period of lower inflation to lock in a smaller base increase. Conversely, avoid locking in long-term terms during a peak inflation year. Also, keep track of SAP’s announcement cycle – engaging with SAP well before the Q3 announcement of next year’s increase could give you leverage to seek exceptions or negotiate an alternative arrangement before the standard hike kicks in.
By proactively using these levers, you can reduce the impact of uplift. The key is to address them during negotiations – after you sign, it’s much harder to change the rules.
Checklist: How to Evaluate Uplift Risk in Your SAP Contracts
- Locate the Uplift Clause: Identify where your SAP contract talks about price increases or uplifts. Is it tied to CPI, a fixed percentage, or “SAP standard rates”? Knowing this is the first step in assessing risk.
- Check Applicable Periods: Determine when the uplift can first apply. Are you in an initial fixed period with no increases? Does the first renewal have protection? Mark the date when the safeguards end and increases could begin.
- Scan for List-Price Ties: Check if your support fee is a percentage of the current list price or if any clause allows SAP to adjust the base value. If so, your costs could jump even if the percentage stays the same.
- Compare to Inflation: Look at your region’s inflation trends versus what SAP has been charging. If CPI has been 2% but SAP rose 5%, you know you’re paying on the high end – a sign to negotiate or at least budget accordingly.
- Project the Trajectory: Run a 3- to 5-year projection of your support or subscription costs with the given uplift rate. This simple modeling (base cost × assumed % increase each year) will show the future financial impact in real terms, helping you gauge how significant the clause is.
By performing this checklist, you’ll have a clearer picture of how vulnerable you are to rising support costs and where to focus your negotiation efforts.
Read why you should benchmark your renewal, Benchmarking SAP Price Increases: How Your Uplifts Compare to Industry and Peers.
5 Questions to Ask About SAP Uplift Rates
- What is the maximum annual uplift allowed in our SAP contract (and is there a hard cap)?
- How is the uplift calculated – is it a fixed percentage, linked to a CPI index, or tied to SAP’s list price changes?
- Are we protected during initial terms (no increases in the first year or first renewal), and when do those protections expire?
- What notice does SAP have to give before increasing our fees, and when would the increase take effect each cycle?
- Can we negotiate better terms – such as a lower cap, a longer price freeze, or other concessions – to limit future uplift exposure?
Asking these questions of your SAP account team (and internally among your procurement and legal team) will ensure you’re not blindsided. Ultimately, being informed and proactive about uplift rates can save your organization significant costs and headaches in the long run.
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