Money Saving Tips for Hardware Contract Renegotiation

How to Save Money on Hardware Contract Renegotiation

Multiple Competing Bids

Check with competing vendors and play their bids off of one another. Each vendor knows that another vendor may be willing to beat his price. But don’t overplay your hand. Know the limits of how low you can go, regarding what the vendor is willing to do. Make sure all competing vendors agree, in writing, to match the hardware specifications within the RFP (Request for Proposal). There have been too many situations where an RFP is generic enough that a vendor misinterprets it and leaves out some feature, thus coming in at a lower bid, but only because he forgot to include something that either wasn’t clearly spelled out, or he misinterpreted the specifications within the RFP.

Wait until after the 15 of the month to negotiate

If you do have competing comparable bids, then you can go with a competing vendor “at a moment’s notice.” The incumbent vendor often will be more willing to drop the price to match the lowest competing bid, if your timing is right. Most vendors have an end-of-month quota they must meet. The closer you are to the end of the month the more likely you are to get a bigger price or feature concession.

Wait until December 10 or after (Calendar Year)

Similar to the above-mentioned end-of-month scenario, vendors also must meet certain end-of year quotas, so the closer you are to the end of the calendar year, the more chance you have of getting better price breaks and better upgrade deals.

Wait until near the end of the vendor’s fiscal year

Very much in line with the above-mention tactics, remember that the vendor’s fiscal year has certain quotas as well, due to budget constraints, budget planning and other related financial reasons. Vendors often must renew certain maintenance contracts and hardware contracts before the beginning of their new fiscal year, as a part of budget planning.

Be willing to negotiate and compromise

If the vendor is lower on price, but missing one or more minor, non-critical features, you might get management buy-in to move forward with accepting the bid. If the vendor is higher on price, be sure to have at least two other competing bids, in-hand, in writing, to show the vendor the disparity.

References

Wall-Street Journal article on saving cost by renegotiating

And remember, these techniques can be just as useful in non-hardware renegotiations.