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In many industries, companies often find themselves facing a simple proposition: a deal that requires exclusivity. Online, such a deal may take the form of a relationship with an advertiser, a vendor, or a business partner.

Deciding whether or not to do a deal that requires exclusivity can be tough. Such deals almost always come with clear advantages and disadvantages. Here are a number of the most important to consider.

Advantages

The security. In many but not all cases, exclusive agreements can provide a level of security that is hard to find in non-exclusive agreements. For instance, an exclusive advertising agreement may provide for a guaranteed amount of revenue over a several year period.

The premiums.
Oftentimes, exclusive agreements can be quite lucrative. After all, if you're giving up the ability to deal with others in a particular area of your business or market, you are probably being paid a premium for that.

You get to build deeper relationships. Managing relationships is one of the most time-consuming tasks business owners and executives engage in. Forging relationships that are exclusive often reduces the number of relationships you need to manage, allowing you to build a stronger bond.

Disadvantages

There's an opportunity cost. An exclusive agreement might look good on paper right now, but locking yourself into one always comes at a cost. After all, a better deal that you can't avail yourself of might come along next week, next month or next year, and you won't be able to take advantage of it.

It's like a marriage. An exclusive agreement is a lot like a marriage. Marriage can be a wonderful thing, but it can also be painful when something goes sour. The other party could, for instance, fail to perform their obligations, leaving you high, dry and in panic mode as you scramble to find a new party to fill their shoes.

Losing touch is easy. Dealing with a wide range of parties enables companies to stay in touch with what's going on in the market. When locked into an exclusive arrangement, it's arguably easier to lose touch with the latest developments and trends, especially if the other party isn't at the leading edge of them.

In short, an exclusive relationship is often a tough proposition to accept, and an equally tough proposition to reject. Making the right decision requires that you weigh not the advantages and disadvantages, both in the short-term and the long-term.

Patricio Robles

Published 20 August, 2010 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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