Three key things to consider in contract negotiations

Do you have commercial negotiations in progress? If so, we are here to support you.

When it comes to commercial negotiations, they often don’t turn out the way you had hoped and then there is no going back.

Sometimes SMEs go into commercial negotiations ill-equipped and hoping for the best. Often, they do not have the depth of experience to get the best deal for themselves – and one that their customer will accept. The counterparty may have an aggressive negotiator on their side and the SME feels unable to push back strongly. At other times, they may not even realise they are getting a bad deal as the implications of the contract are not obvious to the untrained eye. As a result, they may end up agreeing to a less than advantageous deal. Certainly, they are unlikely to get the best possible deal.

There are three key things to consider in negotiations:

1. you need to know your own bottom line and any deal breakers;

2. you need to gauge the other side’s likely position; and

3. you need to know where to stand firm and where to flex.

Here are some examples where we have helped our clients get a better deal.

• A leading sportswear brand was about to pay an online marketplace a commission on a sum that included costs. We were able to negotiate commission payments on profits only. This saving alone was worth £15,000 a year to the client.
• An IT services client was going to risk being sued after they had already remedied their SLA breach. We saw to it that they could not be sued once the problem was solved. Had they been sued, they could have spent several hundred thousand pounds defending themselves.
• A SaaS provider client had no way of checking that their client did not add too many users.

We made sure the client could charge higher rates if additional users were not disclosed on time. At more than £1,000 per user, this would be worth several thousand to the client.

• A marketing company had no price increase provisions in their contract. We helped them renegotiate an annual increase so that the arrangement remained profitable. The increase was worth £10,000 a year to the client.
• Big players try to get their SME counterparties to accept unlimited liability. So far, we have always got a liability cap for our clients, no matter how strong the other side. Just the insurance saving from capped liability amounted to over £20,000 a year to the client.

Instead of struggling on your own, losing a lot of management time and still not being sure you have got the best deal, let us negotiate for you. If you want to start off on the right foot, or if your contract negotiations are in stalemate, or if you are not sure of the implications of certain contract terms and want to get the best possible deal – contact us. We are crack negotiators. We match our tone to the situation – whether collegial or adversarial or in between, we can handle it for you. If you have an ongoing commercial negotiation or one coming up, instruct us to handle it for you. You will get top of the range service for an affordable price.

If you are about to start negotiations, or even mid-negotiation, drop me a line today at sharon.zachariah@waterfront.law to set up a call.