Ravi Blogs about IT Topics

I have had discussions with a few of you recently about purchasing and negotiations. In the event you don’t know, I negotiate EVERY single major purchase that ITS makes. There are varied opinions on this strategy, primarily “Is this worth anyone’s time?” My answer is, if you do it right, it is worth every penny you save. Of course, you don’t want to spend 5 hours on the phone haggling over $1000!!! If it gets that far, walk away from the vendor…

So, why negotiate? Because, you will be surprised how eager the vendors are willing to do it. In fact, they expect you to negotiate. When we initiate discussions about any major purchase, we do a great job doing the research, bring in the shortlisted vendors and finally choose one. Then we begin negotiations. One always asks me how do I come up with the ridiculous counter-offers – sometimes 50% off (and one of our recent major purchases in the last two years was 50% off the already discounted price!).

It is rather simple. I know how much money I am willing to spend on a particular project. And I have been told that I don’t stick to a given number and keep pushing it downwards. I will be the first one to accept that I do it all the time. I adjust the initial number based on the discounted quotes from the vendor. Once I know this number, I tell the vendor what I have and they need to match that. Then there is the usual going back and forth, but we stand firm and the key to all of this is the willingness to walk out of the deal.

It is rarely the case that there is ONLY one vendor who can meet all our needs. We may have philosophical reasons as to why we prefer one vendor over the other. But we have to get over such emotional attachments and be willing to make some compromises.

I am not sure why some of us are reluctant to negotiate when it comes to institutional purchases. I have been told that my obsession to negotiate is cultural. I have different opinions about it, but I don’t necessarily care about the origin of this obsession. I look at it differently. Every dollar I save in negotiating a deal is useful for me because I can put it to use elsewhere.

So, the bottom line is… learn to be a hard negotiator. In planning a project, allocate a significant amount of time for final negotiations. If the negotiation time is around the closing of a quarter for the vendor, you are likely to get a great deal, so try to time it that way.  Be willing to walk away from one vendor and go to another whose product has very similar functionality (or be willing to compromise). I will repeat that I have not been in a situation (in major purchases) where there is ONLY one vendor who has everything you need.

And it is EXTREMELY important that only one person does the negotiating. The vendors would like to influence the decision making by contacting staff members who may be more sympathetic to their solution over the other vendor solutions.

Finally, for one reason or the other, you may not be comfortable negotiating. It is OK. Find one of us who can help you out…