If you are in the process of finalizing a vendor, you will have to come with a strong contract negotiation strategy. While many companies try to get vendors to offer the lowest possible price without compromising quality, your business should try to make your vendor into a partner, who will help you meet your business goals.
A contract negotiation process is considered successful if both parties benefit from the collaboration and the contract is fair and equitable. This will lay the foundation for a successful and long-lasting relationship between your company and the vendor.
Here are some tips when you are planning your contract negotiation strategies:
Prioritize Areas
It is prudent to remember that you will not be able to negotiate everything in one go. So, make a list of things that are extremely important. That way, you can negotiate these things first instead of focusing on items that are not as important.
Understand Your Business Needs and Wants
After you list down the priorities, take a second look at them. That way, you will be able to further cull the list. The idea is to concentrate on things that your business really needs rather than those things that would be nice to have. Many times, things make their way into contracts due to internal clout and these may not be a priority.
Be Aware of Non-Negotiable Items
When you negotiate business contracts, you should know when to walk away. This is true even for vendor contracts. Sometimes, the vendor will not budget. Rather than wasting time trying to convince the vendor, you should be willing to walk away. You will have certain items that will be non-negotiable and if the vendor does not agree to them, it is better to find another vendor.
Determine Performance Standards and Penalty
Make sure you establish performance standards that you can measure and quantify. Make these a part of the contract and let the vendor know. Have a penalty in place – the vendor will negotiate this, and you should ensure it is fair to the vendor and your business.
Dispute Resolution
You should have a process for dispute resolution not just as a part of the contract but also during the negotiation. That will allow you and the vendor to meet halfway while you are discussing and negotiating the contract. This will allow the negotiations to go off without a hitch and also ensure that the vendor feels safe that their interests are also protected.
The Bottom Line
These are some of the strategies you can adopt when planning the contract negotiation process. It will help you to seamlessly negotiate with potential vendors while also assessing the risks and liabilities should anything go wrong.
