Contract Negotiations: Why and How to Predefine Your Negotiables

If you sell products or services to other businesses, you have a massive pool of potential clients. There are more than six million businesses in the United States, and each year more than half a million more are founded. 

Starting a new working relationship with one of these businesses means going through a process called contract negotiations. 

Many Legal Teams Don't Predefine Negotiables

By definition, a negotiable is something not set in stone that can be modified. As a seller, negotiables may include your price per product, the amount delivered, and the frequency of delivery, among other things. Unfortunately, many legal teams go into contract negotiations without a clear idea of their negotiables and priorities. Going into these negotiations blindly can spell disaster for your company.  

Predefining Provides Better Outcomes 

Predefining your negotiables and priorities can help provide better outcomes. To ensure you get a good deal, you should at least know your minimums. Your minimums are your top priorities and are the lowest you'll allow yourself to go during negotiations. Under no circumstances should you accept less than these. Accepting less than your minimums could strain your working relationship from the beginning, create adverse financial outcomes, and even (in some cases) damage your company's reputation.

You can turn this process into an advantage by beginning your contract negotiations with the final result in mind. Do your research on the company you hope to sell your products and services to. Research what your direct competition is offering. Run numbers to see what options are profitable enough for your company to make this deal. 

Ask Yourself These Questions 

To predefine your negotiables and priorities, you need to start with a list. You may find it helpful to create two separate lists as you work through these questions and your research. One list is a priority list where you rank the most important things you hope to achieve during negotiations by importance. The other list can include things you're willing to give up during the negotiations process if it means achieving your highest priorities.

Every contract consideration can start with these questions:

  • How many products or services do I need to order?

  • What frequency do I need these products or services ordered?

  • What is the minimum price per product I need to receive for this deal to be profitable?

  • What (higher point) will I open negotiations for each point above?

  • Are there any other expectations you have for this contract?

Contract Presentation Is Essential 

The visual and organizational presentation of the contract you present is essential. Pay attention to detail and answer all potential questions inside the agreement. You don't want to leave room for interpretation. Additionally, a visually appealing contract has a significantly better chance of success than one that looks like a jumbled mess. Be sure to reduce PDF file size to help you achieve the best-looking contract. 

Predefine Your Negotiables for Success

Your chances of success during contract negotiations are higher if you predefine your negotiables and priorities. Asking yourself questions and doing ample research ahead of time can help you define these key points.

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