How To Negotiate Contracts With Software Development Provider To Get As Much As You Can From It
Preparing for the negotiation with your software partner is the key to successful cooperation. No one would even doubt that. But it is not obvious how one should prepare for that negotiation. In this article you will find an extensive list of issues you should raise when negotiating with your software development partner. In ValueAdd, we are not only aware of all of those issues but help our partners in getting all set up for the negotiations with our offers and briefs.
So read on and note down:
Price and Payment
Most delicate and most basic issue when working with an IT provider is knowing terms of payment. This question should be considered at the first place, and not only because it's important to plan your budget but also because it is important to preset the payment conditions to focus on other issues.
- When should the client pay? Is there payment included in advance? Are there separate payments at each stage of the project?
- How often should they payment be made: first day of each month, after the deal is signed, etc.)
- Should there be a penalty for missing deadlines for both the client and the provider?
- What if there is no reply from one of the sides, is it seen as violation of agreement, and does it trigger a penalty?
- Should the price be fixed (for the whole project)?
- What currency should the payment be made in?
- Are there any price fluctuations and how those will be negotiated?
Scope of cooperation
We talked in the previous post how important it is not to limit yourself to only negotiated scope of cooperation. You can read more on this here (link to the Secrets of building working long term relationship with your IT partner). However it is still important to set up some boundaries, at least to navigate yourself for the end result.
- What is the range of services of your cooperation?
- Are any additional services needed at the later stages of cooperation?
- How would the additional services and related development hours priced?
- Should you sign up another agreement in case you decide to extend cooperation?
- Is there a possibility of hiring a dedicated team in your partner company so that those developers work exclusively on your project?
- What is the warranted period during which a bug is fixed?
High quality PM is arguably one of the most important differences between a poor cooperation with Asian developers and European standard performing Eastern European developer teams. In ValueAdd we believe in agile project management and pay a lot of attention to the way the project is run. Here are some things a client should always bear in mind:
- What are the main communication tools to be used during cooperation?
- Is there an opportunity to talk face-to-face to your developers, CEOs of the partner company for more efficient cooperation?
- Is there a project manager who you can contact on any arising issue?
- What Project Management methodology and tools will be used?
- How often will the team meet with the client?
Once the project comes to its logical end, there is still plenty things to do. Apart from product launch it is important to plan it’s support and maintenance. The cost of scheduled maintenance tends to be stable while the unscheduled and emergency maintenance can lead to 1,5 times higher costs. Here are some tips that will help to avoid this happening:
- Is maintenance necessary for your project?
- How much time should be set up for it?
- What is the length of maintenance contract?
- What is the hourly payment for the maintenance and support services?
- Is copyright issue included into the contract?
- Is there a penalty for the side that violates copyrights?
Whether you plan to cooperate with your partner on a long term basis or you’re interested in the project-to-project cooperation, you would like to make sure you have the source codes. Source codes together with copyrights give you option to be independent from one company. You may switch provider or just develop the product by yourself.
So it does make a lot of sense to prepare for the negotiation with your IT partner. When working with a trusted IT provider, there are no underwater stones so armed with the tips above you are prepared for the mutually profitable negotiation with your remote development team.With this checklist you are ready for your negotiations with IT provider. Use it as your guide and think of some additional ones depending on your specific needs.