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October 20, 2022

BATNA – What You Need To Know If You Want To Negotiate Like A Pro

Negotiating any sort of deal can be a challenging task. Each side has its own interests, so finding common ground can be difficult.


I’d like to focus on the financial aspect of meeting the other side in the middle. As you can imagine, this can be the most important aspect of negotiation.

Let me give you an example: We had a session with a Sydney-based real estate agency specializing in inner-city properties. They wanted to figure out how to create a win-win situation and maximize their gains on both ends.

While there are a number of techniques you can use here, it comes down to developing your BATNA—which is short for "Best Alternative To A Negotiated Agreement."

This is a technical term I learned at Harvard. It is, in fact, very simple to understand.

If you want to sell something for $10 but your client wants to pay $5, but you have another buyer keen at $7? In this case, your BATNA would be $7 and you could use it to drag their price higher.

 

The idea behind BATNA is that you should always be prepared to walk away from the table if you can't get what you want from the other side.


Now, this doesn't mean that you'd actually walk away—most people don't have that option—but it does mean that you should always feel confident in your ability to go home and say "no deal."

That confidence comes from knowing how much money or time or whatever else is at stake for each party involved in the negotiation. If you understand how much money or time or whatever else is at stake for each party involved in the negotiation, then you can use those numbers as leverage when negotiating with them.

If they know that they're going to lose out on $5 million if they don't agree with your terms by tomorrow morning, then they'll probably be more amenable than if they just have a vague sense of being able to get something done later on down the road instead of right now.

 

By knowing both sides' BATNAs, you'll be able to come up with an agreement that works best.