Every situation is different in a contract negotiation and it’s nearly impossible to predict what’s going to happen. You do see trends and have seen many reactions to proposals at the table. I’ve personally learned many lessons dealing with them. To help you understand some of the common ones, I’ve put together a quick FAQ of sorts for scenarios you may come across in a contract negotiation.
The buyer gets angry at a proposed price – Make a conversation out of it. Start by calmly asking why the price is too high. And when the buyer speaks, listen to what they say – internalize it. Take a few seconds, then you can respond intelligently. Maybe you figure out that you have to drop your price. Maybe you figure out that what you offered initially is actually not far off from what the buyer can spend. You won’t know unless you really listen and find some common ground.
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The buyer uses time against you – Throw in another benefit to the deal without dropping the price. Sometimes the deal needs to be sweetened by extra hours of support. Give them something that is a true benefit, not just an added throw-in. This could set the standard for the discussion with the boss.
A maximum purchase price is set early – The buyer is trying to set the standard and gain control. Respond by asking “Can you explain how you got that number”. Try to uncover what their budget really is. If you think this is truly the full budget, then at least you’ve talked yourself into a breakdown of their business. This could prove to be valuable later.
The buyer counter-proposes with a smaller project – Sounds like the buyer is assuming that the price scales evenly downward. Tell them you have to review the price and get back to them. In technology companies, typically when you order more, you can save more per unit. While this is not always the case, you have an opportunity to salvage more from a shrunk deal.
You get threatened with going to the competition – Your product is valuable right? Uphold that value and credibility and don’t rush to get a deal done. This is where you demonstrate how you’re different from the competition and play up your value proposition. This will also get you respect from your buyer as well. If your proposal is fair and you stand your ground, there’s a high chance you won’t have to move far.
Hopefully these were interesting scenarios to think about and a few new ideas on ways to handle them. Enjoy!
