Your BATNA and walk-away point
Know what you'll do if you don't agree, and the worst deal you'll still accept, so you never say yes to something worse than no deal.
BATNA
Best Alternative To a Negotiated Agreement: what you will actually do if this negotiation ends without a deal. The term comes from Getting to Yes. It has to be real and concrete: another offer, another seller, keeping your current job, doing the work yourself.
Omid wants a used car. The seller in front of him is one option. His BATNA is a similar car at another dealer for $9,000, a two-hour drive away. If this seller won't beat that, Omid knows what he'll do.
A BATNA is a plan, not a hope
A hope
"Maybe something better will turn up." "I could probably find a cheaper flat somewhere." Nothing you could actually do tomorrow morning. A hope gives you no power, because you can't walk away to it.
A real BATNA
"The other dealer has the same model for $9,000." "I'll stay in my current job, and I'm fine with that." Something concrete you would really do. The better it is, the less you need this deal, and the easier it is to say no.
Check yourself
Sara has one job offer and is about to negotiate it. Which of these is a real BATNA for her?
- Hoping a better offer turns up next month
- Staying in her current job, which she'd be content to do
- Telling them she has another offer
- Accepting whatever they say
Show the answer
Staying in her current job, which she'd be content to do
Yes. Staying put is concrete and she'd genuinely do it, so it's her BATNA. It also tells her the offer has to beat her current job to be worth taking.
TWO NUMBERS, NOT ONE
Walk-away point and target
Your walk-away point (also called your reservation point) is the worst terms you'll accept; anything worse and you take your BATNA instead. Work it out from your BATNA, in advance. Your target is the ambitious but realistic result you aim for. Keep them separate: people who only think about their walk-away point tend to end up close to it.
Omid's BATNA is the $9,000 car two hours away, so he won't pay more than $9,000 here: that's his walk-away point. From recent listings he thinks $8,300 is a fair, ambitious price: that's his target.
Omid's car, on one number line.
Seller's walk-away: won't go below $7,500
Omid's walk-away: won't pay above $9,000
$7,000 $7,500 ============ $9,000 $9,500
|------- ZOPA -------|ZOPA = $7,500 to $9,000.
Any deal lands somewhere in that range.
Where in it depends on the negotiating.ZOPA means zone of possible agreement: the overlap between the two walk-away points. Neither side knows the other's number, which is why the rest of this course matters.
Check yourself
The seller won't go below $7,500 and Omid won't pay above $9,000. What is the ZOPA?
- $7,500 to $9,000
- Exactly $8,250, the middle
- $7,000 to $7,500
- There isn't one
Show the answer
$7,500 to $9,000
Right. The zone of possible agreement runs from the seller's minimum to the buyer's maximum. Any price in it beats both sides' alternatives.
WHEN THE LINES DON'T MEET
Sometimes no deal is the right deal
Suppose Omid's limit were $7,000 and the seller's minimum $7,500. There's no overlap, so there's no ZOPA. No clever tactic can produce a deal both sides prefer to their alternatives. Walking away to your BATNA is then the right result, not a failure.
This is why you work out your walk-away point before you start: it's what lets you recognise a no-ZOPA situation instead of talking yourself into a bad deal.
Two more things to know
- Think about their BATNA too. If the seller has three other buyers lined up, theirs is strong. If the car has been listed for two months, it's weak, and you have more room.
- Improve your BATNA before you negotiate. A second quote, another interview, a backup flat. It's often the single best piece of preparation.
- Keep your walk-away point private. You never have to reveal it.
- But don't lie about it. "I can't go a cent above $8,000" when you can is a bluff that can backfire if they call it.
Check yourself
If there is no ZOPA, the negotiation has failed.
Show the answer
False
False. With no overlap, any deal would leave one side worse off than its alternative. Walking away to a better BATNA is the right outcome, and knowing your walk-away point is what lets you see it.
Before you start: write down three numbers
- Your BATNA
What exactly will you do if this falls through? Make it concrete, and try to improve it first.
- Your walk-away point
Work it out from your BATNA. For Omid: the other car costs $9,000, so $9,000 is his limit here.
- Your target
Ambitious but realistic, based on what similar deals go for. For Omid: $8,300.
- Their likely BATNA
What happens to them if you walk? Other buyers, other candidates, an empty flat for a month?
- Don't move them mid-conversation
If you're tired, flattered or rushed, that's the worst moment to change your limit. Take a break and check the paper instead.
Check yourself
Sara has a job offer to negotiate next week, and one other interview process half finished. What is the most useful thing she can do before the conversation?
- Decide her walk-away point once she hears their number
- Push to finish the other interview process, so she has a stronger BATNA
- Practise saying she has a competing offer
- Tell them her lowest acceptable salary so they know where she stands
Show the answer
Push to finish the other interview process, so she has a stronger BATNA
Yes. Improving her BATNA makes it easier to say no to a weak offer and to ask for more. It's often the single best preparation there is.
Check yourself
Match each term to Omid's version of it
Show the answer
- BATNA → The similar car two hours away
- Walk-away point → $9,000
- Target → $8,300
- ZOPA → $7,500 to $9,000
Lesson recap
- Your BATNA is what you'll really do if there's no deal. The better it is, the more easily you can say no.
- Improving your BATNA before you negotiate is often the best preparation you can do.
- Your walk-away point is the worst deal you'll accept, set in advance from your BATNA. Your target is what you aim for. Keep both.
- The ZOPA is the overlap between both walk-away points. No overlap means walking away is the right result.
- Think about their BATNA too, and keep your own limit private without lying about it.
- For your prep sheet: my BATNA, walk-away point and target; their likely BATNA.