B2B B2B Pricing Strategy & Contract Negotiation 2 — Questions and Answers
Question 1: What is a Statement of Work (SOW) in a B2B contract?
- A general company mission statement
- A document specifying deliverables, timelines, and acceptance criteria for a specific engagement (Correct answer)
- A vendor's annual report
- An internal HR performance review document
Correct answer: A document specifying deliverables, timelines, and acceptance criteria for a specific engagement
An SOW defines the specific scope, deliverables, milestones, and acceptance criteria for a particular project under a broader MSA.
Question 2: In B2B pricing, what does 'net 30' payment terms mean?
- A 30% discount on all orders
- Payment is due within 30 days of invoice date (Correct answer)
- The contract renews every 30 days automatically
- Pricing is valid for 30 days only
Correct answer: Payment is due within 30 days of invoice date
Net 30 means the buyer has 30 calendar days from the invoice date to remit full payment, a standard US B2B payment term.
Question 3: What is the purpose of a Service Level Agreement (SLA) in a B2B contract?
- To define the vendor's marketing budget
- To establish measurable performance standards and remedies if those standards are not met (Correct answer)
- To outline the vendor's internal HR policies
- To set pricing for add-on services
Correct answer: To establish measurable performance standards and remedies if those standards are not met
An SLA specifies performance benchmarks such as uptime, response time, and resolution time, along with remedies like credits if benchmarks are missed.
Question 4: Which negotiation tactic involves making a concession in one area to gain advantage in another?
- Anchoring
- Trading concessions or log-rolling (Correct answer)
- Stonewalling
- Best Alternative to a Negotiated Agreement (BATNA)
Correct answer: Trading concessions or log-rolling
Log-rolling involves making a concession on a less critical issue to secure agreement on a higher-priority term, creating mutual perceived value.
Question 5: What does BATNA stand for in B2B negotiation?
- Best Accounting Terms and Net Agreement
- Best Alternative to a Negotiated Agreement (Correct answer)
- Business Assurance Through Negotiation Analysis
- Baseline Accepted Terms and Net Adjustment
Correct answer: Best Alternative to a Negotiated Agreement
BATNA is the most favorable outcome a party can achieve if negotiations fail, and knowing it determines how far to concede before walking away.
Question 6: Why is total cost of ownership (TCO) analysis important in B2B purchasing decisions?
- It is required by US federal law for all purchases
- It reveals the full lifetime cost of a solution beyond the initial purchase price, enabling accurate ROI comparison (Correct answer)
- It only applies to physical goods, not services
- It is used exclusively by the finance department, not marketers
Correct answer: It reveals the full lifetime cost of a solution beyond the initial purchase price, enabling accurate ROI comparison
TCO captures implementation, training, maintenance, and opportunity costs that make a lower-priced solution potentially more expensive over time.
B2B B2B Pricing Strategy & Contract Negotiation 2
What is a Statement of Work (SOW) in a B2B contract?