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"It's a fair point but I wouldn't characterize it as a negotiation." I think you are just playing with semantics;) In general, trying to change your agreement
by zaidf 18y ago
"It's a fair point but I wouldn't characterize it as a negotiation."
I think you are just playing with semantics;) In general, trying to change your agreement with a vendor is negotiating in my books. Remember if I proposed $100/month, the vendor could well come back and make a counteroffer of $110/month. I might sleep over it. And then agree to it. I'd call that negotiation.
I can see value in Ridgely Evers book. But I see NOT negotiating aggressively as a bigger problem than negotiating too aggressively. Totally agree with Ridgely in that you have to have a sense of to what extent the vendor will go to accommodate you before it is not worth his time and investment.
For hosting, it is not too difficult to calculate that point. ie. say we are paying $3000/month for a high-end server. We know the hardware cost $6,000 to the host. We know we have been with the host for 6 months and paid them $18,000. We know, thus, that the host has already recovered the cost of the hardware. In addition, we know that the bandwidth at the datacenter costs the host no more than $500/month and the rackspace for our server ~$200/month.
With the server cost paid, we are costing the host ~$700/month and making them a rough profit of ~$2300. At this point, we may be tempted to start our negotiation by telling them we can only afford to pay $1500. Realistically, we can settle on $2,000...saving 33%/month.
All the numbers above are almost real from our recent negotiation with a host.
- skmurphy 18y agoThere isn't a quid pro quo in offering to pay less than you have already agreed to. He isn't promising them future business or renegotiating on a contract boundary, he is trying to stretch out payments because of cash flow issues. I am completely in favor of negotiating aggressively, but I like my word and my signature on a contract to mean something, if only because that has value in future negotiations. As to your situation I don't understand why you didn't negotiate a better deal up front if all of these numbers were available to you? Why not break out hardware reimbursement from bandwidth, rack space, and other services and work out a payment schedule that meets your needs and theirs in parallel with negotiations with other vendors? You have far more leverage when negotiating in parallel than when you are refusing to pay. Why sign a contract and then renege six months in? The impact on your reputation (based on who else they may talk to or get called for a reference) and your next negotiation with this vendor has yet to be felt but I wouldn't rely on it being negligible.
- zaidf 18y ago"I like my word and my signature on a contract to mean something, if only because that has value in future negotiations" Hey, now you are implying that my signature on a contract does not mean anything and that, that is how I prefer to run things. We are talking about ONE certain contract...and in this case, it involves a month-to-month contract. As for negotiating earlier, again, you sound like you are reading from a college textbook. Nothing wrong with it, but I run a start-up and things are not usually as perfect as books may make it seem. ie. We did just as aggressive negotiation at the time of signing up and got the best deal in the market at the time. Also note that at the time the server was given to us, the host had put in money that they had yet to recover. When we went back to renegotiate, that cost had been recovered. "Why sign a contract and then renege six months in?" Usually because some unexpected variables change. Happens all the time, especially in a start-up. And right now, in this economy, even more so! Lastly, your point that you should negotiate just as aggressively at the beginning is well taken. However, doing that and re-negotiating to get the best deal at all times are not mutually exclusive.