There are several things I’ve learned during my tenure within the Information Technology industry, not the smallest amount of which is contract negotiation. Below are 18 tips that will assist you to achieve interdependent terms when it involves negotiating software terms. If you already know the following pointers, then you almost certainly have as many scars as I do.
Ask when their financial year ends. Flexibility for terms and price are maximized at the top of your supplier’s financial year, and to a lesser extent, the fiscal quarter. If possible, adjourn until 2 or 3 days before the deadline.
2. Get all documents early
Ask for all mediocre records (sales order, terms, and conditions, maintenance agreement, license agreement, master service agreement, etc.) as early as possible within the sales process. If the supplier says he must learn more before configuring the small print, invite the quality forms with the specifics left blank. Get the forms in Word, not PDF. Use the Word redline function to point out the changes needed and therefore the questions you've got. If the documents only come as PDFs, convert them to Word yourself. The documents show whether the salesperson’s pitch is different from the company’s solicited practices.
"Have a sales peak at Christmas? Then you’ll need time to buy around for a replacement, and time to put in it and test it. Christmas isn’t the time for testing new technology"
3. Who takes the risk?
Require payments be supported milestones achieved, not time and materials. Ensure timely delivery of the ultimate step by proposing a holdback. Many suppliers warn their quotes are going to be higher if they take the danger, but they know their product better than anyone.
4. Mutual NDA
Ask for a mutual non-disclosure agreement before any serious discussion takes place. When both parties sign, it deletes excuses for not providing important documentation (see #2) and references (see #5). By the way, if the NDA administers for “return of confidential information” cross that out. Require destruction of the tip . We sleep in an electronic, digital age. Seen anyone return electrons?
All suppliers have best friends whose references are worthless to potential purchasers. invite an inventory (depending on the recognition of the software or hardware) of all customers lost within the past 3 years within your industry (retailing, manufacturing, transportation, etc.) if possible. Generally, the supplier will tell you this is often “confidential” or “never given out” and you'll remind her/him that you simply have mutual NDAs. Explain you’ll contact nobody without first discussing it with the supplier. once you get a “no can do”, ask who has the facility to authorize your request, and speak thereto person directly (not through a sales rep, not by e-mail or text). Explain you're getting equivalent info from the competition. Don’t accept a sales rep’s assertion that “none of MY accounts has ever been lost.” When references are checked, they’re often unusually worthwhile because they will compare the new supplier to the supplier candidate.
6. Who’s the boss?
Ensure you are negotiating with someone who can say “yes”. If the person is powerless but offers to “represent” you, likelihood is that slim you’ll get very far. Often the boss doesn’t want to admit to the salespeople just how far he/she will attend make a deal. take care of negotiating with the CEO, though. apart from very small organizations, this person usually wants to have his/her own way, regardless, and sometimes features a very big ego.
7. Keep the competitor list confidential
Your suppliers know their competitors. Often, their people switch from one company to the opposite or a minimum of gossip with one another. Sometimes they fix prices and terms together. Don’t help them by telling them whom they’re bidding against. Your RFP list should be secret. Even the amount of firms on the RFP list should be a secret. If they object to a requirement you create, gently but firmly tell them their chance of success rises the more competitive they're.
8. Pricing for the longer term
Hold the worth of maintenance, updates, engineering assistance by the hour, etc. to no greater than the increase within the Consumer price level, adjusted annually, after the primary 3 years. Same with pricing for extra licenses or additional units of kit. All this is applicable to the first term and any renewals.
Notice of termination needn't be equal. for instance, you ought to be ready to terminate with 30 days' notice to the supplier, but the supplier may only terminate with 180 days' notice to you. Assume the supplier will terminate once you need him/ her the foremost. Have a sales peak at Christmas? Then you’ll need time to buy around for a replacement, and time to put in it and test it. Christmas isn’t the time for testing new technology.
10. we might never do this
We’ve never done anything like that within the past. we might be destroying our reputation if we did that. These are all irrelevant negotiating assertions made by suppliers. Everyone knows that suppliers are bought and sold, and executives come and go. Many suppliers destroy their customer relationships, regardless. you would like a contract that spells it all out, albeit “it’s never happened and can never happen.”
11. Who can understand this?
Abbreviations must be spelled out a minimum of once within the document. If the contract has any sentence longer than 3 lines, or any paragraph (that isn’t a list) quite 10 lines, those sections will likely be unclear to a 3rd party, working sometime within the future, who wasn’t involved within the negotiation. If the contract is unclear, future challenges are likely.
12. Is that this complete?
Accepting a contract with a URL = accepting anything. The content of a URL can change anytime. Content can disappear. The purchaser has no control. If the draft contract includes URLs, invite the URL content to be put into the body of the contract, with the URL omitted. is that the operating environment completely spelled out, including all third party software and hardware versions, browsers, and exclusions? Does it need Flash? Microsoft X? Can it run on Linux?
13. What about technology updates and changes?
Suppliers make updates. Suppose you’re a SAAS customer and therefore the update isn’t compatible together with your procedures or OS version? Suppose changes are needed to avoid a patent dispute? Your contract must specify that if any changes aren’t reasonably acceptable to you, then they have to be delayed for X amount of your time while you discover another supplier (for the non-infringement changes), then you'll terminate without penalty (for all changes). Termination should include a refund of licensing fees and installation. Suppliers often offer a partial refund for the offending a part of the system. But many systems are useless without all the parts working together.
Notice = serious, important communication. It should go via overnight courier (FedEx, express, etc.) not e-mail (could enter a spam folder and be lost) or fax (could be lost or illegible) or certified mail (“certified” simply means there's a symbol of mailing, not proof of arrival.)
Fixes got to be pursued continuously, diligently, using appropriately qualified personnel, whether the difficulty is intermittent or continuous. And does everyone included understand that 99.9% uptime = 43 minutes of downtime each month? That 43 minutes might be at the height of Black Monday, therefore the sales loss might be murder.
Arbitration is usually private, and bad publicity is what suppliers fear most. So don’t accept a compulsory article.
17. Trade names
Your screens, emails, and reports should exclude all trade names except your own. B2B software isn’t depleted to retail consumers or store-level staff.
18. Use by competitors
If the technology is actually unique, likely to stay unique, and your business use case is additionally fairly unique, belief restricting its use at specific, named competitors. These conditions occur only rarely, but once they do, a true competitive advantage is often preserved, for a short time.