Working With 3rd-Party Service Providers

Stephen Yagielowicz

For many companies the question of “how can we save money and reduce overhead?” arises as part of an internal optimization process that typically involves the re-negotiation of services with third-party providers, as well as an analysis of other operational costs.

They say that “the customer is always right,” and when dealing with third-party service providers, whether they are IT functionaries, billing, design or hosting companies, accountants, outsourced support staff or other necessary “help” for your adult business — you are the customer that “is always right.”

Outsourcing and third-party service providers allow many companies to cost-effectively leverage staff and expertise.

This doesn’t mean that you should adopt an adversarial attitude with service providers or attempt to dictate terms to them, but as the customer, you should not be afraid to ask for what you want, to negotiate the best terms, and to be willing to walk should the terms not be adequately met.

For example, you may be happy with your current hosting company, but notice that a competitor offers a similar hosting package at a lower price. This gives you three choices: switch hosts or stay with your current host and continue paying higher-than-market prices — or ask your web host for a better deal.

Likewise, you may be paying X amount per unique visitor for traffic to your website from a broker. Perhaps you could arrange a buy-back deal where the broker would take the exit traffic back from your site — mitigating some of its initial purchase price while replenishing the broker’s inventory — a win-win situation.

It is this seeking of mutual benefit that is at the heart of successful negotiations, for if there is no benefit to one party, there is no motivation for that party to seal the deal.

For example, if your service provider is already offering you a slim-margin deal, or at the limit of its technical capabilities, then perhaps no deal can be reasonably made; as not all customers are worth keeping.

Communication is vital in this process, as is having something to offer in return.

For example, “buying in bulk” is a proven way to lower acquisition costs, whether you’re dealing with bandwidth, traffic, or billable hours. Perhaps a service contract with a longerthan-normal term (a two-year vs. a one-year deal), or an exclusivity clause may be the key to sealing a deal.

Co-branding, ad swaps and other incentives can also help when re-negotiating deals.

For example, a high-volume affiliate asking for a higher payout rate from a sponsor might be placated with some custom content, such as the affiliate site logo on shirts worn by performers in a select scene: great win-win branding and benefits for both parties.

Take this further with the sponsor scheduling several scenes, each with top affiliate logo-clad models, and then turn the production over to prospective shooters to do on spec or as “audition reels.”

This saves the sponsor money, while a new shooter gets his foot in the door ...

However you decide to go about it, periodically re-evaluating your relationships with third-party service providers and then finding, unique, win-win ways to improve deals by providing mutual benefits, is a great way to lower costs and to increase your company’s strength through more solid business relationships.