BATNA — 5 Tips to Master the Art of the Deal

When negotiations get tough, you rely on your BATNA to either get out of it or to at least get something out of the deal. But how does one use it to their advantage?

For this article, we are going to talk about how to use it to your advantage. After this article, you should be creating a BATNA during negotiations like a pro.

I have created a free-to-download editable margin calculation template. It’s a PowerPoint that can help you to be confident in your negotiations. I even created a video where I’ll explain how you can use this template.

What is BATNA?

It’s an abbreviation for “Best Alternative to a Negotiated Agreement”. It’s your backup plan if your negotiation doesn’t lead to a deal. By determining your alternatives, you’ll have more confidence because you have a backup plan if the negotiation doesn’t work out. Because of this, you won’t feel forced to make a bad deal. 

Being forced into a bad deal will usually give you no choice but to leave the negotiation table. We clearly don’t want that to happen as much as possible!

One of the main reasons for entering into a negotiation is to achieve better results than without negotiating.

The stronger the BATNA, the greater the range of alternative courses of action. The stronger the BATNA, the greater the ability to walk away from an unsatisfactory negotiation.

When you find an alternative supplier to your current one that can deliver the same goods or service, the option of a ‘no agreement’ deal is not a risk anymore and as a result of having a BATNA, you’ll have more confidence and more choices to make. Having a well-developed and attractive BATNA is a source of great power in any negotiation.

By determining your alternative plans, you’ll have more confidence because you have a backup plan if the negotiation doesn’t work out. 

The BATNA is your point of departure. Anything you can ‘win’ in your negotiation makes your alternative less attractive.

An Example of BATNA

Mark, a procurement manager of a large supermarket, is negotiating with a supplier of canned food. The supplier offers to deliver 100,000 pieces for a price of $1.50 within two weeks. The procurement manager knows that a different supplier offers the same product for $1.40, therefore Mark knows this offer is worse than his BATNA and he shouldn’t agree. 

Of course, there are other variables that Mark will consider. Is the BATNA able to deliver the same volume? How long will it take the BATNA to deliver? In the end, deals aren’t just closed soley because of price but on many other variables. Having a strong BATNA will help you to unlock your full power and use it to your advantage.

How to Determine Your BATNA

Finding alternatives to your current negotiation can be difficult. Sometimes it will take time to identify the alternatives and even more time to make them attractive. You have to establish a concrete value for your alternatives. For example, what is the value of a supplier who is able to deliver within 2 weeks, compared to a supplier who delivers in 2 months, but at a lower price?

However, exploring your BATNA is always a good time investment as having a strong alternative improves your ability to negotiate a good deal in the current negotiation.

Here’s how you find your own BATNA:

1. What are your 5 best alternatives to a negotiated agreement?
2. Review the list. What alternatives would be the best?
3. How can you improve it? Can you make a better arrangement with another partner?
4. After improving your best alternative, write your new BATNA.

How to Use BATNA

One of the greatest dangers in a negotiation is being too committed to coming to an agreement. Your negotiation partner will immediately sense this and will get the upper hand in the negotiation. 

Before you begin a negotiation, know your options. Are you able to walk away? What are the pros and cons of each alternative? However, don’t stop here. Let’s determine your opponent’s BATNA.