Before I negotiated for clients against providers, I calculated for the provider. You see the same numbers differently depending on which side of the table you sit.
For fifteen months I was the provider. A premium supplier for IT operations, subsidiary of a large software house, clients with the highest demands. In that time I learned how an offer comes together from the inside. That serves me today in every negotiation where I sit on the other side.
An example most clients never get to see: the bundled offer. As a software subsidiary, you could tie license, hosting and consulting into one package. In the tender the hosting costs then look excellent. Only, the margin has long been priced in elsewhere, one-off and in operations. That is entirely legitimate. As a client you just have to know that the cheap line has an expensive sister somewhere else.
The same goes for service levels. A service level objective sounds like a commitment and is not. It is a target you cannot hold anyone to for missing. Only the service level agreement is binding. Whoever does not know the difference signs a promise and holds a wish.
What the premium price really stands for
On the provider side I also learned what a high price stands for when it is justified. We never competed with the cheap suppliers, neither could nor wanted to. The price stood for a round-the-clock operating team, for on-call duty, for redundant support and for real disaster provisioning. The famous plane-crash case: several hundred kilometers between two synchronously mirrored data centers, so a regional disaster does not take the business with it. That costs, and it is worth every cent when you need it. The only question is whether the client really needs it or is paying for a safety their business does not demand.
That is exactly the point. Because for fifteen months I was the one calculating, I can read the provider’s bill today. I see where the margin sits, where a commitment is soft, and where a high price covers real service rather than a convenient assumption. This asymmetry is not a flaw in my CV. It is my advantage at the negotiating table.
For your next tender that means: check the cheapest line first and ask where its more expensive sister sits. And have your service levels given as an agreement, not an objective.
I know how your provider calculates. Not because I read up on it, but because for fifteen months I was the one who did the calculating.