Platform price hikes got you down? Here's how to know who to trust.

July 12, 2023
3 minutes
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For the past four years, you’ve used the same software. Sure, it’s a little janky, but you know its quirks. You know its ways. And you love it, warts and all. And then it happens: Out of nowhere, an email. Rates are going up, and your budget can’t handle it.

You go through all the stages of grief, albeit in more of a “stages of constant-frustration” sorta way. There’s denial (“Maybe they’ll change their minds?”), anger (“What gives you the right?”), bargaining (“Perhaps I can pay the difference in smiles?”), depression (“This sucks. I need more coffee.”), and, finally, acceptance. Remember, it wasn’t all that great to begin with … you were just used to it. Maybe now, you can find a software that fits your budget and your needs.

We have all (and we mean allll) been there, and it’s a tough spot to be in. Nonprofits aren’t exactly known for having expansive budgets, so you need to be able to trust your fundraising platform (or, really, any of your software providers) to maintain affordable, transparent pricing. Can you?

The latest rate increase

So who's shaking the nonprofitsphere? Blackbaud, which provides software solutions to millions of nonprofit users in over 100 countries. Starting in March 2023, the software giant introduced its so-called “modernized renewal pricing,” which will “provide better economics and visibility.” In reality, any customers renewing their contract will face a rate increase in the mid- to high-teens as well as an additional rate increase in years two and three (in the mid- to high-single digits). What’s more, the majority of customers will need to sign three-year contracts going forward.

That’s… a lot. In fact, it means Blackbaud customers could face rate hikes of up to 40% by the end of year three. Blackbaud's not improving the platform or adding snazzy new services, either. They’re just… increasing their revenue, and that cuts into every customer's bottom line, impacting their ability to fulfill their mission.

While this rate hike is a doozy, Blackbaud is hardly alone. For years, SaaS (software as a service) vendors have been increasing their prices, with fundraising platforms hiking rates without offering nonprofits more bang for their buck. If you’re mad as heck and not going to take it anymore, we get it. Let’s take a look at the landscape and figure out where to go from here.

How to stay on top of rate increases

Listen, we get it. Rates go up over time. There’s inflation and there’s expansion and there are market conditions. But. More and more, SaaS providers are just raising rates because they can, and that includes fundraising platforms. So, how do you navigate these treacherous waters and look out for your nonprofit’s best interests? To start…

Be aware.

Software providers are smart, so they know that no one likes a rate increase. As a result, they’re not gonna shout their rate hikes from the rooftops. So, stay aware. Read your emails. Check your bills.

And friend to friend... if a SaaS provider is upping their rates, it may be so they can seem more attractive to buyers. Stay vigilant for fundraising software acquisitions—those are a whole different ball of wax.

Keep an eye out for escalation clauses.

Just like many subscription services boost annual rates automatically after the first year, many software providers sneak in escalation clauses. Blackbaud’s additional rate hike in years two and three is a perfect example of this. Always read the fine print so you know what you’re getting into in the long term.

Check the sprawl.

In 2022, global organizations were using an average of 130 SaaS applications (Statista). That’s… too many. Evaluate whether you have redundant applications. Then, confirm that your remaining software products are serving your needs and delivering as much as possible. If not, maybe you need a solution that can tackle more of these tasks and reduce overall spend.

Attempt to negotiate.

Most vendors have fixed prices, so trying to cut basic pricing is unlikely. But maybe you can convince them to let you do a shorter contract, or to remove that “we can raise the rates without notifying you at any time” clause? (It’s a real thing, and according to Vertice, 88% of SaaS vendors have a clause just like that.) Or, y’know, just switch to someone who won’t arbitrarily raise your rates and lock you into long-term contracts…

Make a change.

If your software provider is raising rates all willy nilly, it’s because they think you won’t leave. But guess what? You can, and you will. There are better options out there—we promise!

Is this a larger trend?

So, things aren’t looking great for Blackbaud customers. But what about other nonprofit fundraising platforms? As the largest in the space, Blackbaud has a lot to live up to, lots of competitors nipping at their heels, and investor pressure like whoa. So while they may be today's headline, you've got to be ready to get news of price increases from any fundraising platform you use. Regardless which platform is raising prices, the question is... how are you going to respond?

Blackbaud renewal pricing increase over time - the bars go waaay up and to the right, meaning way bigger costs for nonprofits

The above slide is a visual representation of the way Blackbaud is selling their new pricing model to their board of investors. As you can see, it means lots more investor profits—at the expense of nonprofits' impact.

What to do when rates get too high

As you can see, those small rate hikes add up over time, and those big rate increases—well, they’re big, and they can make a big impact on your bottom line. So, what do you do when you realize that you just can’t do this anymore—or that it’s just not worth it? Oooo, friend, have we got a solution for you!

Where Blackbaud has drastically raised prices without offering any additional value, Funraise has done the opposite. Since our Donors Cover Fees model leads to an easy uptick in net revenue, our customers are looking at lower subscription prices when contract renewal time rolls around. And you may have seen Funraise's stat:

"Funraise organizations grow online revenue 73% year over year on average, 3x faster than the industry benchmark."

In contrast, Blackbaud reported 9% online revenue growth year over year in 2022. We’re all about stability, innovation, and transparency. Pair that with cutting-edge tools and a user-friendly experience, and you’re looking at better performance and lower costs.

If you’re a Blackbaud customer with specific concerns, we get it. Change is hard! But our native integration with RE and RE NXT might make things easier. Your team members who rely on RE don’t have to change their processes; they'll just see that delectable Funraise data roll in.

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