Telecom Expense Management Blog

When you are negotiating your telecom contract, you should set your negotiation goal to be a Minimum Annual Revenue Commitment (MARC) that is 60% to 70% of the total annual spend with a telecom supplier. Your account rep will suggest that he or she can offer lower rates in exchange for a higher MARC. The truth is that, with larger dollar volume telecom contracts, there is very little correlation between rates and the level of MARC.

Define all services and fees that contribute to the MARC and try to get as many charges as possible to contribute. Your agreement should specify that services being used by new businesses or acquisitions will contribute towards your MARC.

Do not commit to using one supplier exclusively. You want to be able to move some services to another supplier during the term of the contract to exert leverage, if necessary. Avoid language that requires you to prove you are giving a certain percentage of your business to any carrier.

In my next post on the topic of telecom expense management and negotiating a great telecom contract, I will write about the so called “regulatory fees” telecom carriers use to pad their profits.

In my next post on the topic of telecom expense management and negotiating a great telecom contract, I will write about selecting an optimal agreement term and include a business downturn and business divestiture clause.