If you suspect your ServiceNow license count has outgrown your actual usage, your renewal is the golden opportunity to right-size. By negotiating a “true-down” (a consumption adjustment to your license counts), you can align your license counts to actual usage and significantly reduce your renewal costs.
Read our ultimate ServiceNow Enterprise Agreement (EAP/ELA) Renewal Guide.
How to Right-Size and True-Down During Your ServiceNow Renewal
Let’s walk through the key strategies to optimize your ServiceNow true-down renewal. From securing true-down rights to auditing usage and negotiating flexible terms, these steps will ensure you only pay for what you need going forward.
Why True-Down Rights Matter
ServiceNow (like most vendors) usually won’t let you reduce licenses mid-term, so the renewal is your chance to reset. A “true-down” right in your contract means you can decrease license counts or scope at renewal without penalty. If your usage drops or processes change (such as when automation replaces certain roles), a true-down allows you to drop those excess licenses instead of paying for them unused.
Mini-Scenario: A European telecom negotiated a contractual right to reduce its ServiceNow licenses by up to 15% at each annual renewal. When they later consolidated IT service management teams, they invoked this true-down clause and saved approximately €400,000 by dropping the licenses that were no longer needed.
Audit Your Actual Usage and Entitlements
Start your rightsizing journey with a thorough usage audit. Pull data from ServiceNow on how your organization actually uses the platform. For each module, find out how many active users you have (and how frequently they log in or transact) and note any other usage metrics (for example, how many ITOM nodes are being monitored or how many assets are tracked in the CMDB). Next, compare these figures to what you’re entitled to under your contract.
If you’re paying for 500 fulfillment licenses but only 310 unique fulfillment users used the system in the last quarter, that’s a clear sign of shelfware. Do the same for other areas – perhaps you have 1,000 ITOM nodes licensed but only 820 actively in use, or asset licenses far exceeding actual managed assets. These gaps represent opportunities to true-down and stop paying for capacity you don’t need.
Pro Tip: Usage variance equals leverage. The bigger the gap between what you purchased and what you actually use, the stronger your case to reduce licenses. Bring these hard numbers to the negotiation as evidence that a smaller footprint is justified.
How to negotiate your renewal, Securing Maximum Discounts in Your ServiceNow ELA Renewal.
Identify Which License Types to Reduce
Not all licenses carry the same shelfware risk. Focus on the high-value targets – the areas where you’re most over-licensed. Here are some common opportunities to consider:
| License Type | Typical Optimization Approach | Why Reduce |
|---|---|---|
| Fulfiller Licenses | Remove inactive user accounts; downgrade light users to requester/approver roles | High cost per license means even a few removals yield big savings. |
| ITOM Nodes | Recount monitored nodes after infrastructure changes (e.g. decommissions or cloud moves) | Often you’re licensing nodes that no longer exist. |
| ITAM (Asset) Licenses | Align licenses to active CMDB records | Retired assets often remain licensed unless removed. |
| HRSD or CSM Employee Seats | Remove accounts for temporary staff once projects end | Short-term roles often leave behind unused accounts that inflate your license count. |
By zeroing in on these categories, you can find substantial reduction opportunities. Even a few targeted reductions (like those inactive fulfillers or excess ITOM nodes) can significantly lower your renewal costs.
Mini-Scenario: A manufacturer discovered hundreds of retired servers were still counted under ITOM licensing. By trimming down the node count by 18%, they saved about $1.2M on the next renewal.
Negotiating a True-Down Clause
Once you know what you want to drop, the next step is to ensure the contract allows you to do so. So make sure to negotiate clear, true-down language into the renewal. The goal is to bake flexibility into the agreement. This is especially crucial in multi-year ELAs or high-growth contracts where your needs may change year to year.
ServiceNow’s standard proposal won’t include this clause, so you’ll have to request it explicitly. Emphasize that if you’re expected to pay more when usage grows (the “true-up”), it’s only fair you pay less when usage drops.
Timing the True-Down Discussion
Bring up the topic of rightsizing early in the renewal cycle – ideally 3 to 4 months (90–120 days) before your renewal date. Why so early? If you wait until the last minute, your rep may have already locked in expectations at the higher license count, making reductions a harder pill to swallow.
Instead, open the conversation with your account manager well ahead of time. Share your usage audit findings early. For example, if you’re only using about 70% of your licenses, let the account manager know you intend to renew closer to that actual usage. This heads off surprises and gives them time to adjust your quote or seek approvals.
If your rep insists a reduction isn’t possible, don’t take the first “no.” Often, higher-level approval can be obtained if the deal is on the line. You can also sweeten the offer – for example, agree to a longer term – to make the reduction more acceptable.
Pro Tip: Never accept “we can’t do a true-down” as final. Politely escalate – higher-ups can often approve exceptions when faced with losing your business.
Structuring the Rightsizing Deal
When renegotiating, structure your renewal deal to safeguard against future excess. One strategy is to negotiate volume flexibility tiers. For instance, you could seek a clause that your price-per-license remains the same even if you renew at, say, 10% fewer licenses than last time. This way, you’re not penalized with higher unit costs for buying less.
Also consider setting lower contractual floors on modules you expect to scale down. If you know a certain module’s usage is declining, negotiate a provision that allows you to renew at a lower baseline for that module without losing your discount tier.
It helps to bundle your true-down request with other renewal terms so it’s part of a win-win package. For example, you might agree to a longer term or even add a module you do need, in exchange for being allowed to drop the unused licenses. Coupling your reduction request with something that benefits the vendor makes it easier to accept.
Pro Tip: Don’t treat true-down as a standalone demand. Make it one element of a broader deal structure – tied to term length, pricing tiers, or expansions you’re considering. It will feel more like a win-win package than just you asking to pay less.
Avoiding Shelfware in the New Term
After a successful rightsizing, the work isn’t over. The last thing you want is to find yourself in the same over-licensed position a year or two later. To avoid shelfware creeping back in, institute ongoing license governance. For example, run a usage review each quarter, reclaim licenses promptly when people leave or roles change, and set up alerts or dashboards to flag inactive usage early.
These practices keep your licensing tight so that you can enter your next renewal confident you’re not paying for idle capacity.
What If ServiceNow Refuses True-Down?
Sometimes, despite your best efforts, a vendor might refuse to allow any license reductions. If ServiceNow absolutely won’t budge on a true-down, you still have options. One approach is to shorten the renewal term – for example, opt for a one-year renewal instead of a three-year commitment.
This gives you time to adjust usage without locking into an oversized deal. Another tactic is to swap underused licenses for other products or modules your team needs. For instance, trade surplus HRSD licenses for extra ITAM licenses that deliver value. Finally, (tactfully) remind your rep that you have alternatives. Knowing you’re exploring other solutions can sometimes turn a firm “no” into a compromise.
Preparing Data for Negotiation
Data is your ally in any negotiation, but especially when you’re asking to reduce spend. Prepare a concise “evidence pack” to bolster your position:
- Usage vs. Entitlement Summary: A chart or table that shows each license type, how many are owned vs. how many are actually in use. Highlight the percentage of utilization.
- Reduction Plan & Impact: Outline which licenses you want to cut (and by how much), and estimate how much money that would save compared to renewing as-is. This quantifies the value of the rightsizing.
Having this packet ready does two things: it makes your ask concrete and justified, and it gives your ServiceNow rep something to take to their deal desk or approvals process. When hard numbers back up the request, it’s not just a plea for a favor – it’s a data-driven business case.
Read the ServiceNow ELA renewal timeline, ServiceNow ELA Renewal Timeline and Key Milestones.
Five Steps to Right-Size Your ServiceNow Renewal
- Run a usage audit – Identify inactive users, excess assets, or orphaned nodes in your ServiceNow environment.
- Quantify the gap – Calculate how much shelfware (unused licenses and capacity) you’re paying for today.
- Negotiate true-down rights – Well before the renewal, secure flexibility to reduce license counts based on actual usage.
- Rebuild contract terms – Align the new agreement’s license quantities and pricing with your real needs (and ensure future flexibility).
- Monitor usage quarterly – Track consumption during the term to prevent waste and make next renewal’s negotiations easier.
The true-down clause is your insurance against waste. Without it, every efficiency you achieve still costs you money.
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