January 04, 2001, 12:59 PM — It's that time of year when many suppliers offer their year-end specials -- price discounts and additional goodies -- if you sign now. Their motivation is to show year-to-year sales growth and higher incremental profits with a resulting higher stock price.
Driven by this desire to book business before the end of the year, supplier representatives often have the latitude to offer "special-deal" incentives. But remember that vendor reps are highly trained and experienced in using urgency to their advantage. Technology suppliers are well-oiled marketing organizations. Everyone from your friendly account rep up to the vice president is pressured to exceed an annual sales quota.
But for the well-prepared customer, this can be an opportunity.
While the end of the year may indeed be an ideal time to negotiate a good deal, it can also be a trap for the unwary. Haste always makes waste for an IT customer. Don't let a vendor rush you into signing a contract, because you could lose out on further cost savings and contract protections.
Nevertheless, vendors get normally prudent customers to act otherwise by rushing into a contract with lines like: "You know, it's almost the end of the year. We'd like to get your order in this year's business, so we're cutting you a super deal. If we don't get it signed this year, these concessions probably won't be available in January."
The supplier's motivation may be genuine, but it's using a highly effective ploy that's designed to get you to buy now. The risk to the customer is that he can lose focus and react solely to a good price and other goodies, but at the same time he can also give up warranties, remedies for nonperformance and other valuable contract protections -- issues that can cost serious money.
There's no substitute for a thorough analysis of a supplier's offer. In addition to the "great offer," consider these three points:
Is there a legitimate business need for the product?
Are there incentives offered that can be of value to the business?
Are the terms and conditions favorable?
More often than not, these year-end specials come up short when it comes to favorable terms and conditions.
Usually, the supplier insists on using its form contract, arguing that it's necessary to close the deal by the end of the year. Even savvy customers have been known to get excited by the year-end hype, cave in and sign the form agreement. But of all the marketing ploys designed to get a signature on a contract, this one can play into the hands of the well-prepared customer.