What the new AWS marketplace rules mean for you

You may have heard AWS has recently introduced a change to how SaaS vendors qualify for inclusion on spend commitments.

SaaS products must now be fully hosted on AWS to count towards AWS spend commitments, such as Private Pricing Agreements (PPAs) and Enterprise Discount Programs (EDPs). This change has been enacted from May 1st onwards.

So what does this mean for users? And what does this mean for future marketplace spending, cloud discount strategies and vendor procurement? We outline everything you need to know.

What does this mean for AWS users?

The AWS marketplace now lists all SaaS products available, regardless of whether they are hosted on AWS, another cloud, or on-prem.

However, if you have any spend commitments in place with AWS, or are looking to put some in place, spend on SaaS vendors will only qualify for these if they are entirely hosted on AWS.

This is only for contracts with invoices dated May 1st 2025 onwards. Existing contracts from before this date that are still active will continue to count towards your spend commitments, if at least part of their infrastructure is hosted on AWS until contract expiry / renewal, or a new invoice date is agreed. 

Some data and workload migration services may be excluded from this rule, provided that AWS is the only supported destination and the control and application planes run entirely on AWS.

To help spot which SaaS vendors are fully hosted on AWS, marketplace listings will now have eligibility tags (“Deployed on AWS”) for relevant suppliers. 

Why has AWS done this?

At its heart, this is a move by AWS to encourage more use of the marketplace to procure products that use their cloud infrastructure. 

AWS advertise that this change will help streamline procurement operations, quicker vendor rollout, stronger security and increased operational solidity of those vendors “Deployed on AWS”. 

They also highlight that these may also qualify for additional user benefits, giving further incentive to migrate all vendors to those fully hosted on AWS.

However, because this is so intrinsically linked to discounting, it must also be viewed as a way for AWS to secure more spend through their channels - by discouraging spend on tooling that does not contribute to PPA or EDP commitments. 

They do acknowledge this though - saying that, by doing so, users can track their spend more easily with a single source of billing - a known issue for anyone trying to optimize their cloud spending. 

Plus, cloud providers tend to give better private pricing discounts for increased commitments - another incentive to centralize all spend on their infrastructure. So splitting across multiple cloud providers becomes less of a viable option (Azure and Google Cloud also have similar policies that aim to centralize all usage on their clouds). 

What does this mean for your cloud spend strategy with AWS?

Users will want to evaluate their current SaaS vendors, AWS marketplace procurement plans, and any imminent renewals, to see if they will need to adapt to ensure they keep to their commitments. 

It’s likely that many will see a decrease in their committed spend amounts, and will need to decide on a short-term action plan based on the following:

• How far below the committed spend amount they are
• How long left on their commitment(s)
• How many vendors have contract renewals upcoming
• The amount of vendors that can realistically be switched to AWS-only suppliers with the minimal impact on business operations
• Whether the expense of switching vendors / purchasing new suppliers or features to make up the shortfall would be financially better or worse than the penalty for not achieving the committed spend

A short-term increase in AWS spending is likely as companies purchase new tools to make up their committed spend shortfall as they deal with the new legislation. 

However, businesses will also likely reduce their commitments with AWS in the mid to long term. This is to ensure they don’t over-commit or to maintain some flexibility in their vendor choices - even if it costs them extra discount opportunities. 

We know that companies are prizing flexibility over pure discounts. Our data shows that there was a 37% increase in Savings Plan usage, and a 60% decrease in Reserved Instance (RI) usage year-on-year from Q1 2025.

Given that Savings Plans offer more flexibility and generally lower discounts overall than using RI’s to achieve the same aim, this fits the current philosophy of 'flex over pure savings' around cloud spending priorities. We predict this need for flexibility will also win out over ‘enforced discounting’ with a single supplier - in this case AWS. 

Achieving more optimized cloud spend isn't just about Savings Plans and RI's, it requires a cohesive strategy that the whole business needs to be involved in. Learn how to create yours with our Cloud Spend Optimization report.

Will AWS users go directly to vendors and avoid the marketplace?

Potentially yes, especially with renewals and onboarding of mission-critical applications. Making changes to these to fit new commitment levels will likely be costly, time-consuming and resource-intensive - and so any benefits gained from discounts will be negligible or not worth it when compared with the stability they require. 

Tailspend SaaS, where companies can be more experimental, may be where the short-term uptick in spending is focused, but when commitment levels can be rearranged, this will also drop off - and users may also avoid using the AWS marketplace to procure them to enable more flexibility in their purchasing options. 

With a solid procurement process and a negotiation strategy that is data-led, prepared and forward-thinking, achieving direct discounts can be fruitful. For example, our data shows that if you start renewals negotiations with SaaS vendors over 90 days before contract expiry, companies can achieve discounts 49% higher than if they started less than 30 days before.

However, if a fully-AWS vendor knows you are avoiding the marketplace to negotiate with them, this gives them little incentive to give you extra discounts (as they are already incentivized by AWS) so plan your contract negotiations and procurement strategies accordingly. 

Vendors that are not fully hosted on AWS infrastructure may aggressively target companies considering competitors on the marketplace with direct discounts to avoid churn going to those “Deployed on AWS”. Again, planning your tech stack strategy accordingly and in good time can pay real benefits here if you can afford to consider swapping tools, or plan your BATNA well.

If you want to optimize your SaaS and cloud spend, and are trying to figure out how you’re affected by AWS’ new marketplace rules, Vertice can help. Get in touch today to discuss your options.