 |
 |
 |
           |
 |
 |
 |
|
 |
 |
|
|
|
 |
Negotiating Technology Contracts
Have you ever tried to negotiate a deal for software, computer equipment, or consulting services with a technology company? The task can be daunting. Unfortunately, the sales forces of most IT companies are armed to the hilt with techniques to get the best deal for them, and not necessarily the best deal for you. And even worse, most of us computer folk (like myself) have never been trained in the art of negotiation, so it can be difficult to spot a snake in the grass. Before you begin negotiating a technology deal, know what you're getting in to. Solicit, Don't Be Solicited I receive at least three calls each day from technology vendors interested in selling something: hardware equipment, software tools, consulting services, etc. Usually, these calls are "cold". My name somehow landed on a telemarketing list in the hands of some vendor who is calling me out of the clear blue sky hoping that what they sell somehow matches what I need. You can waste hours on the phone letting some non-technical, script-reading, telemarketer or sales representative chew your ear off about their latest and greatest gizmo. Very rarely do these types of calls ever translate into a real business opportunity. The most popular cold call opening is "Good morning. This is Joe from the XYZ software company. We offer break through whatever solutions to help you reduce your total cost of ownership for whatever. Let me ask you, are your responsible for managing your companies whatever investment?" I get so many of these calls that I can answer them in my sleep. Years ago, I used to engage in some level of discussion with these people and it always went nowhere. Unless you really think they've got something you might want to buy, cut them off immediately. And just like any telemarketer, they have a scripted response for anything. If you answer the above question with "No. I am not". The immediate response will be "Could you direct me to someone in the company that is responsible for whatever". If you hand out a name and number, you're just passing the buck to some other poor soul in your organization. My favorite response is "No. We don't respond to phone solicitations." Nine times out of ten, they will give up. Sometimes, the cold caller will make another run at it and re-state their purpose or as they close the call, sneak in another sales pitch. "Yes sir. I understand. We offer something really great for your company and would love to send you a free trial version at absolutely no cost. Its free to try." You could be tempted to say "Free? Tell me more." Again, this type of response will just open up the sales speech flood gates and you will be wasting your time trying to get a word in edge-wise. Stick to your guns: "As I said. We don't respond to phone solicitations." is the proper response. If they make yet one more run at it, the final blow would be "Not sure if you're deaf, but I said we don't respond to phone solicitations. Tell me your name and transfer me to your supervisor." You will either hear apologies or a dial tone. Either way, you've just gotten yourself off of a call list and will never be bothered again. If you're interested in buying something, you do the calling, not the other way around. Put The Horse Before The Cart Never begin looking for technology solutions without knowing what you're looking for. Know the business problem you're trying to solve. If you know you need a software package that automates statistical analysis, flush out a more detailed set of statistics requirements (types of model, sample sizes, etc.) before you begin to shop around. Usually, software products have bells and whistles that, although look cool, are not absolutely needed. Before you begin comparison shopping, define your basic technology and business requirements. Knowing what you really need will give you confidence and leverage in a negotiation. Always Comparison Shop No matter what, always evaluate multiple options. If you're looking for software, don't get excited and latch on to the first package that looks good. And certainly don't give a sales rep. the impression that you're overly interested in their solution. They will be less likely to move during a negotiation. The IT market is over abundant with hardware, software and services solutions. Probably, you will have many options to choose from. Be picky! Create Your Game Plan Before you begin negotiating a deal with any technology vendor, plan your negotiation carefully. I have included some general planning questions that you should answer in preparation for a negotiation. The questions I have listed below may not make sense for your negotiation, so feel free to modify them for the occasion. The point here is to prepare in advance. You don't want to figure out the answers to these types of questions in the middle of a negotiation as it may give an inch to the sales person. I would even recommend writing the questions and answers on a sheet of paper for reference. (Price) How much do you think you should pay for this software or service? What is the market rate or street price? What are you prepared to spend? What is the highest price you would be willing to pay? (Features) What key features and capabilities are you looking for? Force rank the features. What does the prioritized list look like? Of the features you need, categorize them into two categories: "must have" and "nice to have". (Service Levels) Do you expect some level of performance from the equipment, software, or service? Are there up-time requirements? Do you need 24x7 technical support? Do you expect the vendor to incur a penalty if they don't perform up to your service levels? (Trades) What is most important to you: price, features, or service level? Force rank these in order of importance. Would you be willing to trade items between categories? For example, would you be willing to give up a certain service level for a lower price? (Suppliers) Which vendors offer something that you think could meet your needs? How long have these companies been in business? Are you doing business with them already? Do you have a good business relationship with them? (Gravy) If you had your druthers, what extras would you like the vendor to throw in for free? Would you like training or extra manuals? Would you like special reporting? You will probably have more questions in addition to the ones listed above. Take the time to write them down and create the answers. Once you have established your position, you will save a great deal of time evaluating your potential vendors and negotiations will be less painful. Lead The Dance When you are ready to face off with a vendor, do your best to drive the discussion. Get as much information about the vendor and their product and service before price enters into the discussion. Just like car buying, pick out your car (or choice of cars) before you negotiate a price. If you find that the discussion is prematurely heading toward pricing, bring the conversation back to understanding the product or service itself. If you're not ready to talk price, say something like "Right now, I am just evaluating your product (or service). Unless I think there's a real opportunity, I'm not prepared to negotiate price right now." Pricing for hardware, software, and services follow very different models. Hardware prices are fairly standard unless the product is new. Usually, the mark-up on hardware is very small (1-15%). On the flip- side, the mark-up for software is huge (100%+). Software is priced based on value, not the cost to the vendor so you can usually negotiate software prices down substantially. Services are usually based on labor rates and are marked up based on the demand for those skills (15-50%). When you are ready to discuss pricing, take the lead in the dance. Here are the steps to follow (in this order): Follow these steps, and you will strike better deals and build confidence in your ability to negotiate. What I have left out in the steps above are standard questions that vendors love to ask. Let me leave you with these questions, their underlying motive, and what you should say. The trick is to always put the ball back in the vendor's court to better your position:
There are others, but always maintain your control, patience and poise and always take the lead in the negotiating dance! About The Author Andy Quick is co-founder of Findmyhosting.com (http://www.findmyhosting.com), a free web hosting directory offering businesses and consumers a hassle free way to find the right hosting plan for their needs. Feel free to contact Andy at andy@findmyhosting.com in case you have any questions or comments regarding this article.
MORE RESOURCES:
Negotiation - Google News |
|
|
|
RELATED ARTICLES
A One Stop Financial Solution Amy Wright, 34, was extatic when her realtor showed her the three bedroom townhome overlooking the lushious golf course. It was exactly the home she was looking for. How to Negotiate Effectively You may be thinking, "Gary, I am a mom, housewife, or stay-at-home dad, so why do I need to know how to negotiate effectively?"I'm glad you asked.The truth is everyone needs to negotiate. Do You Want a Paycheck or a Passion? 10 Qualities Managers are Looking for in Hiring You Based upon my research of over 300 managers in the last two years, I have found what qualities are most important to hiring managers.You will be in a more competitive advantage if you do a self-assessment to determine if you possess these qualities. Negotiate Like a P.R.O. Whether you're negotiating a peace settlement in a war-torn country or a peace settlement in an argument-ravaged relationship, strong preparation is the key to success.The following three steps will help you establish the three keys to your preparation - why you are involved in the negotiation, how you intend to conduct the negotiation, and what are the specific outcomes you are hoping to agree upon. Negotiation: A Compromising Position Negotiating is a hot topic these days for a good reason. It is difficult to imagine a more vital managerial skill than the skill of negotiating. Business: Keys To Negotiating Well Whether it's buying a car, asking for a pay rise, saying 'no' to a friend or renting an apartment - at some stage in our lives we all are going to need to know how to negotiate. Yet, so few of us know the basic skills before embarking on life changing purchases or decisions! These 8 keys will assist you negotiate well. Managing the Sales Negotiation Process How many times have you heard:"You've got to drop your price by 10% or we will have no choice but to go with your competition.""You will have to make an exception to your policy if you want our business. The Ultimate Truth in Persuasion OK, so you want to improve your persuasion power right?Why? What's your intention?As you know your intent directs the flow of energy in your interactions with others. So doesn't it just make sense to have in mind a really clear and strong intent before you engage in your powerful persuasion mission. What Are The Four Types Of Negotiating Outcomes? Negotiating outcomes are the types of results that can happen at the end of a negotiation. All negotiations end up with one out of four possible outcomes: one party wins and the other loses, both parties lose, they get stuck in a stalemate, or both end up winning. Suppliers as Your Partners in Cost Reduction This article is one of the many articles still to come in which I will discuss very basic yet proven techniques that you could use immediately in your encounters with your suppliers.Oh but wait, to find any value in this article, you must be a firm believer that Purchasing strategies have evolved from just 1) focusing on price and 2) focusing on quality, reliability, responsiveness and total cost to a much broader focus of building supplier relationships. So Whats Your Argument? Arguments aren't always bad things. Sometimes They're used to convince someone of an important point they may not yet realize. How to Change Somebody's Mind Believe me, it's not easy! And sometimes, it doesn't work at all.But while researching my book on how to produce more memorable writing, I stumbled upon these "mind changing" ideas from multiple sources. The Art of Negotiation in 535 words I want to get better at negotiation, but where to start? UK Amazon currently has 2332 books on negotiation. Google indexed nearly 4 million relevant (yeah right) pages. Embarrassed To Discuss Your Prices? Seven Common Reasons We Cant Talk About Them Last week, a wonderfully-skilled electrician installed a new light fixture for us. He was competent, courteous and efficient. Secrets of the Trade Revealed: Bartering for Business In its simplest form, bartering involves an equal trade. One business swaps a good or service for another. Negotiating Tactics: How To Strike A Negotiable Opening Shot There is no right or wrong to fire up your opening negotiation.. Power Pricing - Getting the Right Price for Your Products and Services There's an old joke about the New York City blackout. Power was out everywhere, and the electric company couldn't figure out what was wrong or how to fix it. Negotiating Skills Will Get You Ahead Negotiating skills can help you manage lots of different kinds of life situations, both at work and in your personal relationships. Here are a few examples of where these skills can help you build an even better life for yourself:1. While Youre Waiting Not long ago, I made a partnership pitch, on behalf of an organization I represent, to another organization with similar interests. If the idea had come to fruition, it would have radically changed our organization. Ask for More - You May Get More If you are involved with sales, how do you feel when you hear phrases such as, "Can you do anything about your price?" or, "You'll have to do better than that." and variations on these? Does a cloud or two cross the sun? You start to think, "here we go again?.
|
 |