Contract negotiations: Pricing
We’ve talked about contract negotiation before, yet on a regular basis are still hearing horror stories that could have been easily prevented. A common mistake is not negotiating in pricing controls.
At CGP, we have one large vendor that tries to increase our prices substantially every year, to match their current “MSRP”. Every year we send them a copy of our old contract that has a price increase cap, and say no thanks. we continue to pay substantially less.
A typical price cap will be 3-10% per year or renewal (if multiple year term). This keeps the vendor from drastically increasing pricing for you. Watch out for language that specifies a certain product or service, for example “the standard package”. In that case, try to modify the price cap to apply to the entire contract, but if that is not possible, instead say something like “the standard package or its successor”. Sometimes a company will restructure it’s products/plans, and you do not want to lose a price cap in that situation.
Get CGP’s experts in your corner when it comes to negotiating vendor contracts! Talk to a partner: