Negotiate the Best Possible VoIP Contract

Updated: April 30, 2009

According to, 50 percent of global telecom traffic is now handled over IP — a figure that is expected to increase to 75 percent over the next few years. What's more, at least seven out of ten respondents expect VoIP to be "important" or "extremely important" to their organizations by late 2008.

It's no surprise that VoIP vendors are responding to this continued high demand with countless offerings, from on-premise packages to hosted services . And it's precisely this steep competition that has created plenty of wiggle room for companies to negotiate the best VoIP contracts possible. Long gone are the days of fixed prices and non-negotiable variables. These days, it doesn't hurt to ask for the odd price break or value-add functionality. Here are a few areas of leverage worth considering:

On-Premise Perks

VoIP hardware is a perfect spot for savings, said Jayanth Angl, an analyst with Info-Tech Research Group. "There's often an opportunity for vendors to bundle other network equipment, including switches and routers. Although they're often required to support a solution, they can also be bundled in with a VAR (value-added reseller) or systems integrator," he said. What's more, noted Angl, discounts tend to be higher if a company opts to purchase all of its VoIP equipment from a single vendor.

Double Up

One strategy to take with hosted or hybrid solutions is to ask for a step up in functionality at a cut rate. You can't expect a vendor to give you a premium solution like a call-center solution as a freebie for your business, but you should be able to get that kind of an extra at a discount if you are signing up for more than one kind of service at once.

Class Acts

Whether on- or off-site, VoIP training offers plenty of benefits, from familiarizing IT personnel with the latest protocols for seamless deployment and maintenance of a VoIP network to bridging gaps of knowledge that exist among varying departments. But companies need not fork over tens of thousands of dollars to bring their employees up to speed on the latest VoIP technology. "One strategy that we've seen have considerable success is incorporating IT and telecom staff training as part of your VoIP arrangement, either informally or as a formal contract revision," said Angl. Even better, obtaining training directly from a VoIP provider is often of greater value than turning to a third-party provider.

Long-Term Commitment

By now, most of us have been urged by some over-zealous cell-phone carrier to sign a 100-year-long contract in exchange for free ringtones. But companies willing to make a long-term commitment to a VoIP provider — in exchange for added features and services — shouldn't fear getting duped. "If there's been a good relationship with the vendor and the service has been up to par, that's usually a good indicator to stay with that vendor." Especially if sticking around means discounts on hardware and services.

Size Matters

Be sure to consider a vendor's size and industry position when negotiating a deal. Said Angl, "In larger organizations, especially where there's an existing relationship with a large solution provider like a Cisco [Systems Inc.] or Avaya [Inc.] , there's often an opportunity for deeper discounting." On the flip side, today's small businesses can encounter difficulties when it comes to requesting price breaks and better service. After all, vendors aren't exactly eager to slash costs if there isn't any big-dollar deal potential. That's why small businesses in the market for a VoIP solution would be wise to convince vendors that although their current needs are meager, there's room for growth and network expansion down the road.

Not on the Table

While every contract should be worked out on a case-by-case basis, there are some variables that simply shouldn't factor into a negotiation. Network security , for example, should be an expected service. Similarly, a company should never be willing to sacrifice uptime percentages, service availability and customer support — even if it means passing up a so-called deal of the century. It's just not worth the risk.

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