Part of the Six K&R Principles of Negotiations

License Compliance and the Value of All Terms in Negotiations

Terms in negotiations cost money; someone pays the tab (bill): This is one of the six foundational principles of K&R Negotiations’ Win Wisely™ method. Every term in contracts and negotiations should be of some value, and each term has an associated cost. As a negotiator, knowing the rationale for a term enables you to articulate the value and identify its cost. The value of the total deal is the aggregate impact of all the terms. If you don’t understand the rationale behind the terms, not only is your credibility impacted, but so is your leverage. The following story illustrates this principle in action.

Gene, a sales rep for a technology solution provider, is trying to sell support services for a client’s e-services distribution infrastructure. The client is a multimedia lifestyle content distributor. A new contract for $4M is on the table. Read more

Six Principles Every International Negotiator Should Know: Terms Cost Money; Someone Pays the Tab

This is the ninth post in a series entitled: The Principles of International Negotiation: Finding Universal Value in a Complex World

Every term in contracts and negotiations should be of some value. And each term has an associated cost. As a negotiator, knowing the rationale for a term enables you to articulate the value and identify its cost. The value of the total deal is the aggregate impact of all the terms. If you don’t understand the rationale behind the terms, not only is your credibility impacted, but so is your leverage.

Suppose you are negotiating a private label distribution OEM (original equipment manufacturer) deal, representing the seller. The seller’s standard agreement has a term in the contract that states: “In the event any part fails within the warranty period, the customer may return the part at customer’s expense and supplier will send a replacement part within three business days.” Read more

K&R Success Stories Published

K&R Negotiation Associates has published a few representative success stories on the K&R Web Site.  Here are excerpts and links to more information:

  • K&R’s client turned a $150K annual loss into a $50K annual profit, while at the same time raising their own client’s satisfaction with the service. (more)
  • K&R’s client realized 6.7M€ of revenue in their current fiscal year, and 60.2M€ additional revenue within two years. (more)
  • K&R’s client benefited between $13.5K and $250K. The ultimate buyer saw a clear ROI from the total $837K investment in our Client’s products. Both our client and our client’s client were rewarded through the application of K&R negotiation principles. (more)
  • K&R’s client did not offer expensive guarantees and rebates as part of their services package. This will positively affect profitability as the agreement executes. The result was generated by carefully understanding client needs before offers were made. (more)
  • K&R’s client closed $2M higher than expected, using a few simple K&R principles. (more)
  • K&R’s client benefited by up to $65K, and began the process of breaking a pattern of discounting with their client, which will repeat in every transaction. Our client’s client was satisfied, because they understood the value of what they were buying. (more)
  • K&R’s client closed for $1.6 to 2.1M more than they expected to, using K&R’s value principles. (more)

The Qualcomm and Nokia Patent Agreement

In a previous article we discussed Negotiation Leverage in the long-running, but recently settled Qualcomm/Nokia patent dispute.  Setting leverage aside, let’s look at just one of the reported terms of that agreement as an illustration of one of K&R’s Six Principles of Negotiation.

The principle is this: “Terms Cost Money, Someone Pays the Tab (expense).”

What the principle means is that as you negotiate, you should consider that every term in the final agreement will cost one side or the other money.  You should therefore be careful when altering your terms.  Mistakes can be expensive.

This does not mean, however, that the cost to each party is the same. Read more