Negotiating Rates with Affiliates

Jim Luff
Posted on October 19, 2011
Do you negotiate on farm-in and farm-out jobs?
It seems that every day we get a call from some affiliate asking what we can do about the price. I hate this question! Can you negotiate on the price you pay at the pump today? Can you negotiate with the power company on how much energy you use today? I would say the answer is a resounding NO!
If you are in a true relationship with a network or an affiliate, usually there is a document drawn up in the beginning of the relationship outlining the charges for different types of vehicles. I like to think that the prices we set are fair and reasonable for the work being performed and the type of vehicle provided. The agreed upon rates are then loaded into our computer in the client profile, and as far as I am concerned, that should be the end of any pricing discussion.
When I farm an order out, I always assume that the price being quoted to me is the price the affiliate feels they need to charge to deliver the service I am asking for and allow them to make a fair and reasonable profit. I do believe that is what the game of business is all about. I don’t ask for deals. I don’t ask for discounts. I assume that when we entered the relationship that an affiliate provided me with the best rate they were able to provide.
Yet, I have large networks that call all the time and ask things like, “Is this the best you can do?” “Can you give me a flat rate of $XX.XX?” I always ask, “Do you have a copy of our agreed upon rates?” I mean, seriously, if you have a copy of the rates I provided, why are you even asking for a price? I gave you the price when we first started doing business.
I suppose since I am on the receiving end of the question and not the one asking the question maybe I am wrong in my way of thinking that everything in life should be negotiable. I don’t even know why we have an established rate sheet. Maybe we should just start asking people what they think is a fair and reasonable price and go from there.

-- Jim Luff, LCT contributing editor

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Jim Luff Contributing Editor
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