Knowing what’s possible and good
techniques for handling the sales force
can lead to the outcomes you wish.
The Mechanics
of a Negotiation
Negotiations begin with
the
mechanics. Which components are
negotiable and which aren’t? What
expectations can you reasonably have
and successfully complete a negotiat-
ing session? For example, many of us
think the acquisition process ends
with the selection of a vendor from a
Request for Proposal (RFP) released by
our institution. Practically, this is
when the negotiating process actually
begins. Now you can affect the final
purchase price, ongoing support costs,
and associated terms and conditions
that define your institution’s relation-
ship with that vendor. In Table 1,
“level of criticality” designates which
items to actively negotiate and where
to hold firm to your objectives. It
highlights items important to you
versus those you could give up in
exchange for acceptance of your
terms on
the highly
critical
components.
Deep Discounts
One major consideration when
negotiating an acquisition or contract
with a vendor is your budget. Nothing
is more disappointing than to find you
underestimated what a product would
cost or what sort of educational dis-
counts a vendor might offer you. A
fundamental if sometimes frustrating
fact is that the more money you have to
spend, the greater the influence you
have on the size of the discount the
vendor will accept. Sales teams don’t
just look at the net revenue you pro-
vide; they have an easier time convinc-
ing their executive management to
approve additional concessions if the
deal has a high pre-discount list price.
Not surprisingly, the discount possi-
ble also depends on how much margin
exists relative to the product you’re
acquiring and the degree of competi-
tion in that industry. In hardware, for
example, you can expect to see dis-
counts ranging from 20 percent for
desktop systems (depending on vol-
ume) to 60 percent for servers. We’ve
often seen discounts as high as 30 per-
cent off list price regardless of how
much you