How to Negotiate Your Contract Renewal?

In a previous article, we discussed the steps that you should take into account before the renewal of your license agreement, including the most important aspects that should be considered. In this article we will focus on the most daunting phase: the negotiation. Negotiations can be difficult; it’s an even more daunting task when there are your business’s needs at stake and some huge amounts of money involved. There is no universal recipe for how to get the best deal. Each business’s needs are unique, and therefore each deal is unique. Nevertheless, the negotiation process is largely the same, no matter if you’re negotiating in the Turkish bazar or at the table with a powerful software publisher.

The below provides a number of tips that may come in handy when you have to negotiate your license agreement renewal:

Know what you want to buy – determine your Bill of Materials (BOM)

If you already went through the previous preparation steps, you reviewed your license entitlement and deployment position and you determined the future demand of your business. This exercise dictates what software licenses, cloud services or support and maintenance services you need to obtain. When you know this, you’re ready to be at the negotiation table.

Contractual terms – specify what you require

Bring your own draft of the contract in which you included all the terms and clauses that you need and lacked in the previous contract. Not being prepared with what contractual terms and conditions are important for yourselves (e.g. customer definition, assignment possibilities, audit clauses, divestitures etc) will result in a situation in which you will most likely be signing up for the standard contractual terms of the publisher.

There’s no rule saying that you only negotiate once. If you’re not 100% sure you get the deal that you want (and even if you are) you should still ask your legal department to review the contract before signing. In the heat of the moment you can miss on important aspects. Read the contract carefully, if you don’t understand something, ask for clarifications. If you don’t agree, ask to discuss again that point.