Contract renegotiation tips

Every contract requires renegotiation when there are changes to your business environment or the contract reaches a renewal point or the supplier is taken over or merges with another entity. And renegotiation always throws up opportunities to improve the pricing and/or terms of the deal in your favour. Mark Bartrick, Managing Director of Silver Bullet Associates is a keen advocate of making the most out of every renegotiation and has saved his clients significant sums of money when contracts are renewed and renegotiated. Mark offers a few guideline below:

1/ Prepare well before contacting your supplier. Be clear about what you need and don’t need in any new contract. What has changed since the last contract was signed and what needs changing to mirror your current and future circumstances? Discuss the contract and its scope with your internal stakeholders. Define what you need, what you must have and what you’d like to achieve during the up-coming renegotiation.

2/ Within your organisation, agree who is going to do what and when. Define your timelines and allocate responsibilities and ownership. Get the right people involved who can make decisions. Be clear what your budget is at the outset. 

3/ Communicate clearly with your supplier; explain your expectations in terms of timescales and lines of acceptable communication.

4/ ‘What’s in it for me?’ Try to identify an incentive for the supplier. Don’t simply demand a price reduction with nothing in return. Find out what motivates them at the moment and see if you can find some common ground.

5/ Be clear what your walk away point is and what your alternatives are before commencing the renegotiation.

6/ If you don’t ask, you don’t get. It never hurts to get a ‘no’. But it always hurts to find out after the fact that you could have got a better deal if only you’d asked.

7/ If you have any doubt about the renegotiation, or are unsure whether your IT supplier is giving you their best deal, then contact Silver Bullet Associates and get an independant unbiased view from the renegotiation experts.

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