In 1981, a book entitled ‘Getting to Yes’ was published and became a much-deserved bestseller. In their book, the authors, Roger Fisher and William Ury, introduced the world to the term, BATNA. The letters stand for ‘Best Alternative to a Negotiated Agreement.’
The Best Alternative to a Negotiated Agreement is a backup plan that should be prepared before going into any form of negotiation situation.
In its simplest terms, it’s an acceptable Plan B in case Plan A fails.
BATNA, however, is much more potent than merely being a Plan B. Your BATNA can be used as a negotiation tool during the Plan A negotiations to strengthen your side of the bargaining. Let us take a look at a brief example:
Victoria is Looking to Make a House Purchase
Victoria is in the market to purchase a new property and has seen two houses that she loves. Like many things in life, she likes one home more than the other, but both are undoubtedly acceptable to her. Her favorite house costs $17,000 more than the other house that she has been considering. Victoria’s least ideal home is her BATNA; it’s her Best Alternative to a Negotiated Agreement. When Victoria speaks to the current owners of the more expensive house, she can use her Plan B house as a bargaining point in her negotiations. She may tell the owners that the price is around $17,000 over her budget. The current owners may be unmoved by this statement. However, if Victoria then mentions that she is also considering an almost identical house which costs $17,000 less, then she has played a very strong card regarding her negotiations.
Victoria’s last remark may encourage the current owners of the more expensive house to drop the price. If they don’t, then Victoria can make other comparisons between the two properties to the point where both houses appear identical, but this one seems overpriced.
The owners may offer a reduced price but not as much as Victoria was hoping. At this point, Victoria may decide that she can afford the revised cost, or if she really cannot agree, then she still has the Best Alternative to a Negotiated Agreement, which is the other house. Either way, Victoria will end up purchasing a home and either will be acceptable.
4 Crucial Factors to Consider in BATNA Negotiation
- Cost: You need to compare the value of the desired deal with that of your best alternative. If both agreements entail lease payments or other long-term payment commitments, then also calculate and compare those long-term payments. You need to figure which of the deals is most affordable when all is said and done.
- Examine the Feasibility: Do both deals offer precisely what you are looking for and check all the boxes? Does either of the deals have small print that makes it much less attractive?
- Think About the Impact: Does one of the deals offer benefits immediately whereas the other agreement sees positive benefits at a later time? If the solution you are looking for needs to be put in place quickly and efficiently, then one deal may not offer both of those features.
- Think About the Deal From Your Counterparts Point of View: Taking this step will allow you to be ready for any objections or counter-negotiations that may be offered by the other party. To prepare yourself for this eventuality, make a list of all the points that you’ll bring up to try to obtain the best deal. When your list has been prepared, write alongside each one, the possible objections or counter-negotiations that the counterparty may have cause to disagree. Finally, pre-prepare your responses to those new comebacks.
Take a Look at This 9 Minute Video to Learn More About BATNA
Your Ace Card
If you believe that you are about to enter into a potentially close round of negotiation, then consider having two BATNAs. Having two Best Alternatives to a Negotiated Agreements strengthens your position as you have twice as many favorable comparisons to counter any strong negotiation points.
— Brocard Consulting (@Brocotiator) February 22, 2018
BATNAs Aren’t Just for Business Deals
Always try to enter any situation where negotiation will be involved with a well prepared BATNA. Also, consider that cases involving negotiation aren’t just business deals! There are many times in our lives when we have to negotiate. Consider this example to make that last comment more clear: Jack wants his teenage daughter to clean the house. His BATNA is that he’d also be happy if she just tidied her bedroom. I think that you can imagine that in this scenario it’s pretty sure that his daughters’ bedroom will be tidied by the end of the day.
For pay rise requests to your boss, your BATNA may be the negotiation point that you may seek employment elsewhere. Make sure that you use the BATNA for the true purpose here and not merely as an empty threat. Only consider this example if you do have a best alternative lined up.
The earlier example in this post discussed Victoria and her house purchasing negotiation. The same type of situation arises when you go to buy a new car, so that is also another scenario where BATNA can be utilized.