Is it better for SMBs to buy or lease new tech equipment?

You’re Spending How Much on Technology?

August 6, 2015 Tech4BusinessNow Article

If you’re not embracing the art of negotiation to make the most of unadvertised discounts and perks, you’re probably over-paying.

By Andrea Holved

From enterprise-level software solutions to cloud service accounts, from web hosting to telephone service, your business’s technology needs come at a price. But did you realize that price is often negotiable?

Small- to medium-sized businesses in the U.S. will spend on average about $300,000 on tech products in 2015, according to a recent survey of IT pros conducted by Spiceworks, an Austin, Texas-based network-management software company.

“SMBs account for half of all IT spending worldwide,” says Kathryn Pribish, a program manager at Spiceworks.

With an impact like that on the technology market, it’s no wonder vendors are often willing to negotiate with SMB owners—especially if they have hopes of developing a long-term relationship.

“There’s always that potential of the future,” says Margaret Neale, a professor of management at the Stanford Graduate School of Business.

Neale, who specializes in negotiations, says it doesn’t matter much whether your business is already a long-time customer or you’re calling the vendor for the first time; what matters is the prospect of you remaining or becoming a loyal customer.

“When there’s a future in it, folks are oftentimes much more collaborative or cooperative in the interaction, than if it’s just a one-off deal,” she says.

Making the call

Ben Strackany, CEO of Portland, Ore.-based digital agency DevelopmentNow, had been with two of his technology vendors—a web-hosting company and a project-management software company—for several years when he called them to negotiate a discount. He made it clear that he hoped to be a customer for several more years to come.

At the beginning of each call, Strackany says, he simply stated, “We want to keep using [your product], but at the current cost level we’re not sure we can.”

The cost of providing tech services goes down over time, Strackany says, and DevelopmentNow had been paying the same price since signing up, so he knew it would be an easy win for the vendors to discount their services and keep his company’s business. Even so, he says, “it was important to me to offer something back, because I knew they didn’t have to give me a discount.”

He offered to give a positive testimonial to both vendors to feature on their websites. In exchange, he received a 10% discount on the project-management software used by his company and a 20% reduction in web-hosting expenses.

Strackany’s successful strategy was perfectly aligned with Neale’s recommendations for approaching a negotiation. Here’s a three-step strategy:

  1. Reframe the issue

Don’t go into the negotiation thinking it’s a fight. Rather than approaching this interaction as an adversarial process, reframe it as a problem-solving collaboration.

For example: “I want to solve our problem in a way that’s good for you, but also gives me more of what it is I want,” Neale says. Watch her YouTube video on the topic.

  1. Plan ahead

Think carefully about everything that you—as well as your counterpart on the other side of the negotiation—can bring to the table.

“I need to understand what my interests are, what I’m trying to achieve in this negotiation,” Neale says. But, she adds, “I need to understand the interests and preferences of my counterpart.”

  1. Make it a package deal

Asking for a compromise on just one thing—such as, for example, price—makes it much more black-and-white as to who’s won the negotiation and who’s lost. “The question is, what are other issues that you can bring into the discussion?” she says.

Keep the conversation on multiple issues, negotiating everything together at once, she says. Then, if one issue can’t be resolved to your liking, you can pitch a scenario involving adjustments to other issues that make up for it.

For example, if the vendor can’t budge on price, perhaps the inclusion of free support or an account upgrade makes the price more palatable to you.

“When you negotiate issue by issue, every issue is adversarial. You win or lose,” Neale says. “When packaging issues, you now have the opportunity to trade among the issues.”

Also, she says, “Think about using if/then language. ‘If I give you this, then I get that.’”

By introducing the idea of writing positive reviews of his vendors into a discussion about price, Strackany made his negotiations feel more like an exchange than a grab for a discount.

“If you want to ask for more, you need to offer more,” he says. “We were happy to reciprocate the goodwill.”

This article was underwritten by HP: Introducing HP BusinessNow, the right technology to help your business grow. To register your business for a $25,000 tech makeover please visit: http://www8.hp.com/us/en/solutions/businessnow/contest.html