Dealing with an Offer

Sometimes, convincing a prospect to buy your product isn’t the hard part – structuring the deal is.

Take Jim, a software developer who wrote a small program that he was selling for a modest fee via his website and through direct sales. A company contacted him after using his application to find out if they could license the distribution rights to his software, or purchase it outright.

Since this is not a normal course of business, at least to date, Jim had to get a crash course in negotiating this kind of deal.

  • Will the deal be exclusive, and therefore limit his own abilities to distribute the application, or find other distributors?
  • What kind of support packages would the client want?
  • How is the deal to be structured – flat fee, annual rates, usage based?

The smartest thing to do in such a case is to put the onus on the buyer to come up with the initial terms. That is, politely respond to the buyer that you are interested, at least in concept, and ask them to provide a more detailed offer. Imply that there may be more available than the publicly available version – part of the up-sell that could create some room for leverage later on. Ask them to include a section for support and maintenance.

If the buyer has gone through this process ever before, then they will know how they would like to structure the deal, and the kind of terms they can expect to end up with. By asking them to provide an opening offer, you create room for an immediate acceptance if the offer is overly fair (unlikely, but possible), some haggling over the details if the general ideas are acceptable, the issue being with the number, or a flat refusal if the offer is so poor as to be offensive.

If the buyer has not gone through this process ever before, they will have no idea how to present a fair offer. However, they will now have to evaluate the costs of leaving you out of the loop, something they likely have already done before contacting you in the first place. This gives them their limit on how much they would spend on such a product or service, and they will work backward from there.

In either case, pushing the buyer to start the negotiations can only benefit you – if they ask you what your terms are, then you will still have to come up with a fee structure and pricing model, but it is more likely that the answer to your query will be exactly what you need – a starting point for the offer.