Dealing with licensing and royalty rates is definitely a daunting job. Unless you do it on a regular basis, you probably have no idea what works and what does not. You have no clue what to look for, not to mention about conducting the optimal negotiations. However, this process can be split into more smaller phases. Tackling each of them at a time can ensure a way better result. So what are the most significant considerations?
Steps in successfully facing a royalty rate negotiation
The first step implies doing your homework. Not sure about values or other legal agreements in this industry or niche? You are not the only one. Click here to access one of the most comprehensive royalty rate database in Europe. The company maintaining it – Royalty Range – is based in the United Kingdom, but its entries are gathered from all kinds of public records in Europe. There are more than 150,000 entries available. Apart from database submission, customers may also benefit from individualized data research and collection, as well as benchmarking studies and pack drafting. All these things will give you some hints about what to expect, not to mention about the current market trends and costs.
On a different note, it is important to work as a team. This is one of the hardest parts in the process, yet it is not impossible. There are more points of view to pay attention to. Think about the technical, business and legal aspects altogether. Acceptance terms and conditions are only a few of the elements that need to go through these three implications. It is your responsibility to ensure that these three departments work in a tight collaboration in approaching the deal. When they have no clue what the others are doing, unpleasant situations will arise when least expected.
Future considerations should be analyzed as well. Your current agreement is supposed to count all the potential changes within your company, but do not forget to address the vendor’s future either. Buying a software? How is it licensed? If licensed per user, server or location, you might need a different license if you hire more people or open a new facility. The overall maintenance is not to be ignored either. What about upcoming technologies and upgrades? What happens if one of the businesses gets sold?
Last, but not least, do pay attention to the contracting procedures. The telephone is widely used, yet it does not really make the best option in particular industries. For instance, you do not need to call for a software license, but just get the vendor’s standard form, complete it and email it. In other industries, face to face meetings are more appropriate, but once again, it depends on the issue and industry. Normally, contracting processes should not take more than a few days or weeks, while both parties need to keep some copies of the communicational log. This is what makes the phone a wrong solution. Find out who will be part of the negotiation and what their roles are.