Is a short term or long-term contract with my vendor better in terms of cost savings?

You have the opportunity to save money over time with short-term contracts. This concept is counter to the philosophy that discounts and prices improve only as the contract term is extended. So how can short-term contracts improve savings opportunities over long-term contracts? The key to this concept is negotiations opportunity. The more often a contract expires, the more opportunities you have to negotiate improved contract performance with your vendor. While a 36-month contract may initially offer better price points than a 12-month contract for the same service, the 36-month contract also minimizes your negotiations advantage. Three 12-month contracts covering a 36-month time span affords you the ability to negotiate price points three times, as opposed to one time with a 36-month contract. While short-term contracts are not practical in all situations, the shortest term acceptable for your situation will create a negotiations advantage scenario that could benefit your organization over time.