data, negotiation, budgetI need to buy data for my program (to be more specific, the data is the definition from a good dictionary, not the ones that’s available online). I do make money from my program. All of the vendors both ask me what is my budget to buy it, and the estimation of the number of users will use my program. I feel that they are trying to know how they should price their data. In return, I want to minimize the money I have to spend. How should I negotiate with them?
Your assumption is only partially correct. Before initiating a sales one thing you do is to assess whether there’s a fit or not. As a sales, that includes identifying whether a prospect is worth your time or not. You do so chiefly in terms of:
Whether the need is genuine vs one that’s merely nice to have.
Whether you’re taking to the right people, i.e. the ones whose opinions count and those who wield a checkbook vs an information gatherer.
How far away closing the deal is, i.e. “I need it right now!” vs “Maybe I’ll need it some day but please give me samples and a few hours of your time to help me make up my mind”.
Whether the budget is a) sensible for the task and b) worth your time as a sales.
If you don’t tick all four boxes a good sales will put you in one of two piles: “Nurture” (if you tick 2-3 boxes) or “Abandon”.
The worst service you can do to yourself is to work against the sales by resisting answers - you’d end up in the “Abandon” box of any sensibly run sales team. Minimizing your costs may come at your own expense in the end.
The most common gotcha I see as a sales manager, as an aside, is when a prospect doesn’t come prepared to pay a sensible price under any circumstance. You can try to articulate the actual costs involved in producing this or that piece of data (I’m in that business too), and some prospects see the light when you do. But in the end, if someone can’t offset your costs then it’s a bad fit and it gets filed under “Abandon” - the faster the better.
With this primer on how sales think out of the way, you want a BATNA (best alternative to a negotiated agreement) before going into any negotiation. As in, what is your credible alternative to NOT signing this deal.
In your case that likely means identifying what the actual costs involved are. Is it manual data entry? Data scraping? API integration? What’s a sensible effort involved to get the final data in each case. Don’t forget all of the potential complications, e.g. error/quality control, bot counter-measures, network failures, and what have you.
It also means identifying what your potential upside is. Not made up wishful thinking figures, but an actual, properly sketched upside. An excellent sales will refrain from selling you anything if they can’t clearly picture the upside on your end. They do this because they like happy clients: happy clients sign new deals later on and, even more interestingly, send great referrals.
With these two cards in hand, you’ll be in a much more comfortable position to negotiate: you’ll know how low you can make it, at the cost of an alternative with whatever downsides, and you’ll know what your maximum budget can be before it no longer makes any financial sense for you.
Again, do NOT try to be cheap at all costs: the deliverable needs to be worth your money, but producing it also needs to be worth someone else’s time. If you broadcast that you’re too cheap, the only thing you’ll achieve is to make your sales conclude you’re a bad fit or too hard to work with to be worth their org’s time.
Last note: be aware that it’s usually better to negotiate a deal as a whole than it is to negotiate it point by point… unless you’re very seasoned in negotiations. If you’re not, by all means avoid that kind of point by point chatter: put everything problematic forward at once when negotiations start, and work out as many concessions as you can from there. (You probably won’t get them all, so do the most important ones first.)
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