Extreme Value Negotiation
One of our media business customers needed a web-based platform to manage artists' sites. The project cost was a few million dollars. Demand for a sophisticated research engine for the application grew, and a contract at 22% of the total cost, plus 1st year maintenance at a cost of 18% of the total cost, was presented to TIG for negotiation. Our analysis showed that the search engine's added value was at most 7% of the value of the platform. We entered the negotiation with a limit of 7% of the total cost of the project. We also knew that one-year maintenance is more critical in the second year (which is the time table for full production). We concluded with an agreed price of 5%, with maintenance charges beginning twenty months after signing of the contract, and were reduced to a yearly rate of 15%. The net savings to our client were approximately 49% of the project cost.