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(DAY 47) Getting squeezed in a deal

· 2 min read
Gaurav Parashar

No where else to go

Many a times, dealing with counterparts is impossible. They are willing to provide you the services but they charge exorbitantly. They do so with a smile and subtly communicate it to you. In other words, through their words or actions, they let you know that you have no where else to go. It can be because the business is a monopoly or that the business knows that you have high switching costs.

High switching costs

High switching cost also happen due to moats or regulations in place. It is typical of financial institutions. Once in such a situation, it is a pure negotiation - where you are trying to minimize your cost and they are trying to maximize the revenue. In addition, they are aware that you have you have no where else to go.

I was squeezed today such an issue today with our bank for rolling our FX hedge. While, I am fully aware that my bank charges my corporate account more than what it charges a retail account. On top of it, it added a obscene fees and tried to justify it as "process" of the bank. Sometimes there's nothing much you can do in such a situation except pay up. I was able to negotiate the fees down to half of the initial ask but still got squeezed.