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.
Oh No Mr. Bill! (Part 2) Patents at Qualcomm and Nokia
In our preceding article we applied the principle of Negotiation Leverage to a sales argument for replacement software. The case we looked at used an overstated fear of the risks of lack of support to attempt to drive a client to buy a replacement. We called it the "Oh No Mr. Bill!"[1] argument, because it relied on using the fear of catastrophe to motivate the buyer. For the most part, it is an ineffective argument.
Let's look at another "Oh No Mr. Bill!" argument, this time for patents.
In 2005, a string of lawsuits began between Qualcomm and Nokia, after Nokia's license to use Qualcomm patents had expired. It is a certainty that Qualcomm, in advance of that expiration, warned (or "threatened" - take your pick) Nokia that failure to renew would cause any number of catastrophes…
Oh No Mr. Bill! Your Software is Going End-of-Life.
When negotiating, you should be aware of the principle of Negotiation Leverage. Leverage describes the use of facts, rationale or conditions to move the other party closer to your way of thinking. Here are some simple examples:
Your software is already installed and in production, or your services team has completed 2 phases of a 3 phase implementation project. You have leverage when additional licenses are required for the same task, or when phase 3 of the project starts, because your software or services team is proven, and there is a cost of conversion to move to another alternative.
Leverage can be related to time (such as end-of-life). When cars are leased, there is leverage on the buyer (leasing party) to make a decision at the point of the lease expiration (or slightly…
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…
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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.
