Preparing for a Negotiation: BATNA or Bottom Line?

Negotiating and Bargaining
Knowledge Center

Best Practices
Chloe Xu
Director, Australia

Preparing for a Negotiation: BATNA or Bottom Line?

It is important to prepare yourself for any negotiation, including the minimum you are willing to accept. In my post on BATNA (Best Alternative to a Negotiated Agreement) I explained this concept and argued it is critical for negotiators as they cannot make a wise decision about whether to accept or reject an offer unless they are clear about what their best alternative is.

I also mentioned that in the process of developing a BATNA, reservation value (aka bottom line) needs to be considered. As BATNA is evaluated based on bottom line, are BATNA and Bottom Line in fact the same thing?

A Bottom Line is the least price you will accept as a seller, or the most you will pay as a buyer. The bottom line is meant to act as the final barrier where a negotiation will not proceed further. It is a means to defend oneself against the pressure and temptation that is often exerted on a negotiator to conclude an agreement that is self-defeating. Although bottom lines definitely serve a purpose, they also regrettably foster inflexibility, stifle creativity and innovation, and lessen the incentive to seek tailor-made solutions that resolve differences.

In contrast to a bottom line, a BATNA does not concern itself with the details of any particular negotiation, but rather determines the course of action if an agreement is not reached within a certain time frame. As a gauge against which an agreement is measured, it prohibits negotiators from accepting an unfavourable agreement or one that is not in their best interests because it provides a better option outside the negotiation.

Since BATNA is the alternative to what a negotiated agreement would offer, it permits far greater flexibility and allows much more room for innovation than a predetermined bottom line. When a negotiator has a strong BATNA, (s)he also has more power because he possesses an attractive alternative that he could resort to if an acceptable agreement is not achieved.

⇒ Any further tips for BATNA? What other tools do you recommend to prepare a negotiation?

Source: Chern, C. 2014, The Commercial Mediator's Handbook, CRC Press.

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