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24.10.2017 Funding

Winning a Deal with a Large Corporate (Part 2)

In part one we looked at getting buy in from the organization along the whole value chain. We looked at the different departments you needed to get on-board, as well as other topics that were meant to help you to get to yes. The one major thing that can make or break the deal, even though all parties agree on the demand and need, is pricing. Let’s now take a look at a few things to consider when discussing and negotiating pricing

Pricing – It’s a confusing world when trying to determine the right price to offer your product or service at. What you think is correct and right could be miles away from your prospective customer’s expectation, either high or low. Here are a few tips to streamline the pricing discussion so both parties are happy and willing to do a deal.

Free is never an option – As tempting as it might be to offer something for free with a potential for a big win later, don’t do it. The corporate partner needs to have skin in the game to ensure their full attention. Think of it as a commitment fee. If the service you provide needs to be free for it to pass through certain signoffs, try to negotiate in a way that you get paid for the initial project, but after your services have been contracted long term, feel free to provide them with credit that rolls back previous work done. Each service is unique so think of creative ways, but not too complicated, that the corporate will feel you, as a partner, have skin in the game as well.

Ask questions – Don’t go into a negotiation without doing your homework. What has this corporation paid for such services, in the past? What are the signoff levels? If you are making a manual process, how many people are currently working on it and their costs? You should already know your costs, but don’t price your solution and product based on that. It should be based on what the Corporate is willing to pay and their willingness to implement such a “cost saving/making” solution.

Don’t mix capital investment and product/service fee – For early stage startups, you might be looking to win your first clients as well as going through a seed or series A stage investment. One thing you don’t want to do is mix these two discussions up. As it might be a brilliant idea on paper to join the two, the issue with doing them as a package deal puts both topics in jeopardy. Most of the time, as well, these two topics are handled by two completely different teams, so by doing this way. it can delay the launch of the project. The main focus should be getting the project off the ground.

Think post PoC – Similar to what we mentioned in Part 1, there must be a clear proposal post project. The last thing you want to do is run a successful PoC, but realize that afterwards both parties can’t reach an agreement financially. The PoC is a short-term project, with the real clear aim is a long term relationship.

If you are able to keep these few tips in mind when engaging with corporates with the aim to win a deal, then you should be in a good place.

Author

James Sanders

Project Manager & Startup Coach – SIX Group
LinkedIn

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