Contract negotiation is a crucial skill for any tech professional, whether you are a freelancer, a startup founder, or an employee. But how can you keep up with the changing landscape of contract terms, clauses, and best practices in the tech industry? In this article, we will share some tips on how to stay ahead of contract negotiation trends in tech and avoid common pitfalls.
One of the first steps in contract negotiation is to know your value and communicate it effectively. This means doing your research on the market rates, the demand and supply of your skills, and the value proposition of your services or products. You should also highlight your unique selling points, such as your experience, expertise, or portfolio. Knowing your value will help you set realistic expectations and negotiate from a position of strength.
Data should be your friend in a contract negotiation if is one involving your specific services. Use data to show what you have done, how you have done it, how often, and for whom. Use your job experience to illustrate your key skills and your expertise.
During contract negotiations, it is essential to emphasize the pain points that will be resolved after implementing the software or product. Consider adding an ROI where it is relevant. For example, try positioning the product as an opportunity to avoid losing revenue, credibility, or competitive ground due to government sanctions, rather than solely as a chance to save money.
Another important factor in contract negotiation is to understand the context of the deal. This includes the goals, motivations, and challenges of both parties, as well as the industry standards, norms, and regulations. You should also be aware of the current and future trends that may affect the contract, such as technological innovations, market shifts, or legal changes. Understanding the context will help you tailor your offer, anticipate objections, and find common ground.
Researching and understanding industry standard pricing and what the range is will also better prepare you when creating your offer. This way, you can better position the pricing according to the value you provide.
Sit in the other party’s chair. By doing so, it will help you see and consider the holes or gaps in your argument or position. It will also help you anticipate the arguments and the presentation of the other party. Take every opportunity gain insight into the motivations of the other party. Ask yourself: “What is driving them to a particular outcome?” By sitting in the other party’s chair, reaching a deal or compromise is often times more obtainable. The most difficult arguments, facts, or evidence to overcome are often those that you did not see coming.
A good contract is one that is clear and concise, avoiding ambiguity, jargon, or unnecessary details. You should use plain and simple language that both parties can understand and agree on. You should also define the key terms, scope, deliverables, milestones, payment terms, and responsibilities of each party. Using clear and concise language will help you avoid misunderstandings, disputes, or litigation.
Contracts can be a true maze of conflicting language, confusing jargon, and defined terms. Make the contract as straightforward and simple as you can especially with regards to deliverables, timetables, and payment terms.
Contract negotiation is not a zero-sum game, where one party wins and the other loses. Rather, it is a collaborative process, where both parties can benefit from finding a mutually acceptable solution. To achieve this, you should be flexible and creative, willing to compromise, adapt, or innovate. You should also explore different options, scenarios, or alternatives that may satisfy both parties' needs and interests. Being flexible and creative will help you create value, build trust, and foster long-term relationships.
Well, actually sometimes contract negotiation IS a zero-sum game. The best negotiators understand the value of looking for situations where multiple parties can obtain multiple benefits. * Robert Mnookin's book Beyond Winning: Negotiating to Create Value in Deals and Disputes (2004) has valuable advice. * Both Harvard Business School & the Harvard Project on Negotiation for Lawyers offer continuing professional education courses on this topic. T
Technology can be a great ally in contract negotiation, especially in the tech industry. You can use technology to streamline the contract creation, review, and signing process, using tools such as templates, automation, or e-signatures. You can also use technology to enhance the communication, collaboration, and negotiation process, using tools such as video conferencing, chatbots, or blockchain. Leveraging technology will help you save time, money, and resources.
Large Language Models (LLMs) can pass the bar exam with flying colors and have become good enough to automate the writing of entire contracts, and to verify their legality against more laws and regulations than any human could read in a hundred lifetimes. The next step will be to integrate these engines with standard sales management tools and e-signature services. Then, contracts will not get in the way of closing sales anymore. No more excuses!
Technology should be another set of tools in your toolbox. It's up to you, however, to know the right tools to use and when. Not all technology is right for all jobs and often the right tool is not even one that is technology based at all.
Important besides language is to understand differences in business culture and the impact on wording in a contract... sometimes wording can be offensive.
Contract negotiation is a dynamic and evolving skill that requires constant learning and improving. You should always seek feedback, evaluate your performance, and identify your strengths and weaknesses. You should also keep abreast of the latest developments, best practices, and innovations in contract negotiation, using resources such as books, blogs, podcasts, or courses. Keeping learning and improving will help you refine your skills, boost your confidence, and achieve better outcomes.
Clearly ID and detail your Scope of Work, services, exclusions, inclusions and associated billing units, descriptions and rates whether it’s daily rates or T&M or LS in your proposal, and insure all your SOW and billing provisions are incl. In your agreement before executing. Daryl Schauer, P.E.
Adapting to Remote Negotiations: With the rise of remote work, be prepared to negotiate contracts virtually. This could involve using digital signatures, video conferencing tools, and other tech solutions. Understanding Data Privacy and Security: As cybersecurity becomes increasingly important, ensure you’re up to date with the latest laws and regulations. This could significantly impact contract negotiations.