Tough talk for hard times
How to negotiate harder with vendors
By Thomas Hoffman | Published 09:45, 20 January 09
3. Use Your Leverage.
But renegotiation after the fact is never easy. Given the difficulty of adjusting a licence in midstream, the best cost-saving opportunities are at the front end of a contract, when the vendor knows that you can still walk. For example, vendor pricing models are often poorly documented, says Wang, so before you sign, make sure you completely understand the terms of pricing and use them to your advantage. "It's more cost-effective to flex up," he says.
That means, for example, that a customer with 1,000 users should negotiate hard for the first 500 seats at the onset of contract negotiations and then add sets of 100 more licences as needed, Wang says.
4. Ask, and You Shall Receive.
In light of the economic crunch, some vendors are coming up with creative financing to entice would-be customers to sign deals, says Schleiden. If they don't, you should. "We have a list of side perks we typically ask the vendor for," says Schleiden. These include cost caps on future maintenance and licensing increases, and free first-year maintenance. "We've never been successful in getting them all, but we typically get several," he says.
Never hesitate to ask vendors for concessions, says Gartner analyst Jane Disbrow . During the course of contract negotiations, software vendors will typically go through a discounting process "that leads the customer to believe that [the salespeople] won't be able to feed their own children tomorrow because they gave them such a great deal," she says.
But don't worry about the vendors. They "always tend to hold back money," Disbrow says. Your goal should be to not leave any of that money on the table.
