Annual price increases: how to negotiate indexation clauses
Many Software contracts become a few percent more expensive each year, often unnoticed. With the right agreements, you can keep control of that increase.
- 10 February 2026
- 5 min
An annual price increase of a few percent seems small. But over multiple years and dozens of contracts, it adds up quickly. A 5% yearly increase makes a contract more than 27% more expensive after five years.
How indexation works
Software contracts usually contain one of these forms:
A fixed percentage per year, regardless of inflation.
Linked to an index, such as the consumer price index.
The right to adjust the list price, where the new price applies at renewal.
The last option is particularly tricky, because you cannot know in advance how much more expensive it will become.
What you can negotiate
A cap. Agree a maximum annual increase, even if the index or list price rises more sharply.
Price protection over multiple years. Fix the price for the entire duration. Note: this also locks you in for longer.
A renegotiation right. If the increase exceeds the cap, you may renegotiate or cancel.
The same price on expansion. Set that additional licences are added on the same terms.
The right moment
The best chance for good agreements is in a new contract or a renewal, preferably three to six months before expiry. Mid-term, there is less scope, but when expanding licences you can still raise the issue.
How SoftVaro helps
SoftVaro maps the indexation clauses in your contracts, shows what they will cost you in coming years, and negotiates caps and price protection on your behalf, supported by benchmark data from comparable Enterprise projects.
Frequently Asked Questions
The most commonly asked questions on this topic.
Can I address indexation during an ongoing contract?
The scope is smaller, but when expanding licences or making interim changes you can still discuss indexation. You have the most room during renewal.
Is a multi-year contract always advisable?
Not always. Price protection is valuable, but you also commit for longer. Weigh how certain the use of the Software is over coming years.
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