What is Contract Negotiation?

Contract negotiation is the process through which purchasers and suppliers reach an agreement on market and pricing issues, ensuring a fair price that benefits both parties.

Factors to be considered in contract negotiation include, the application of an SLA that allows the buyer to specify the minimum performance and service levels that the supplier is expected to provide. The key is to develop key performance indicators (KPIs) that summarize specific performance criteria that a supplier is expected to meet.

For a successful contract negotiation, marketplace analysis is crucial which includes the best price, average price, and the business unit’s price to determine expected trends in pricing.