Nogotiation Blog

Insights on Business and Sales Negotiation

Join us for insights on how to negotiate a winning balance, where where both sides understand and appreciate the value they receive. As a result, you are more likely to forge a long-lasting relationship that yields more and better opportunities in the future. This idea underpins K&R Negotiations’ Win Wisely™ approach and underlines the importance of using leverage wisely.

Is Your Software Better than Free?

Open software is in the news every day.  Much of it is licensed for free.  For priced software, K&R hears, time and again, sales pitches similar to this, "We're providing you with $100,000 (Euros, Rupees, Rubles...) of software value for only $63,000 (just sign here)."  If you are a buyer, you have almost certainly heard this type of argument.  If you have used this argument as a seller, you can be almost completely certain that it did not close the sale.  Even if the sale closed, this argument was not what made it happen.  Let's look at the reasons. First: a certain logic is at the heart of this argument.  One version goes like this:  "Price is a shorthand description of customer value, and a lower price is better because it makes the same value available for less."  There are…

Coffee on the Nairobi Coffee Exchange

While many, including K&R's own GM of Business Development, might argue that coffee could not possibly be a commodity (bought primarily on price), at the wholesale level it is.  Recent news from the Nairobi Coffee Exchange (NCE) provides some simple examples from coffee sales that can be transferred to information technology sales.  In short, when does "commodity" not necessarily mean "inexpensive" - or even "the same"? What happened on the NCE? A recent Business Daily Africa article noted that weekly auction prices for coffee were up six weeks in a row, to a 12-year high.  This is interesting, and the price rise is attributed in the article first to the fact that coffee is not considered discretionary by consumers.  Like commuting costs, coffee costs are "mandatory", and sales do…

Monopoly Value, or Not?

K&R believes (and teaches) that you should understand your "leverage position" in a negotiation.  As a seller, the worst position you can have (in terms of the price you can get) is to be a commodity, the best is to be a monopoly.  As a buyer, you will get your best prices and terms when buying commodities, your worst when buying from sellers who have a monopoly position.  The primary criteria in most cases is "will the purchase satisfy the business need?"  Once that criterion is met, the number of available, suitable solutions directly influences the price.  What (arguable) monopolist is being moved down the leverage slope this month? Monopoly power allows the party who holds it to do things that their client base doesn't like.  A simple, current example: Microsoft announced some…

A Seller's Market for Uranium

On 04/02/08, a New York Times article titled "Report Prods U.S. on Sale of Highly Priced Uranium" inspired us to take a Negotiator's viewpoint on disparities in value between parties. The US government is sitting on an inventory of partly processed uranium… formerly viewed as unwanted waste that would cost hundreds of millions of dollars to stabilize and dispose of… BUT… a steep increase in the price of uranium has made it worth billions of dollars. Clearly this is a multi-faceted issue, with many variables that can affect the final decision. But then aren't all issues (aka negotiations) like that?  Since the Department of Energy (DOE) is  now deciding how to proceed, one certainty is clear: by the time they make a decision and gain whatever other congressional and executive approval…

LogicaCMG and Dovetail

A recent agreement between these two companies yields a simple of example of the different values often seen by the two “sides” in a negotiation. LogicaCMG is a European IT and business services company.  Dovetail is a provider of payments systems.  They recently announced that LogicaCMG has acquired a “master license” to Dovetail’s payment systems technology.  The details are not important to us, except that they provide a window on motivations, and how the motivations of two sides to a negotiation are almost always different. At the core, most sellers get their business value from money.  Most buyers are using the purchased technology or service to solve a business problem, which in turn leads to value.  The accomplishment that the technology enables provides the value…

Amazon & the Service Level Agreement

There is a fundamental principle you should remember when negotiating. Ask yourself, "What problem am I trying to solve?" before you settle on terms and/or prices. Recently, Amazon experienced outages in their Amazon Simple Storage Service (S3), which provides scalable storage and retrieval to Amazon marketplace vendors.  The Service Level Agreement (SLA) says that Amazon "will use commercially reasonable efforts to make Amazon S3 available with a Monthly Uptime Percentage (defined below) of at least 99.9% during any monthly billing cycle (the "Service Commitment").  In the event Amazon S3 does not meet the Service Commitment, you will be eligible to receive a Service Credit as described below"...  Great.  The SLA was not met this month. Now what? Or in this case, What problem are we trying…

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Creating Value-Based Leverage

In this short video, learn why negotiation is really the art of finding agreement.

Mladen Kresic introduces the concept of value-based negotiations leverage and why it is a powerful tool for moving conversations to an agreement.

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