Negotiate Without Fear

4Define Your Reservation Point

One reason that people are often afraid to negotiate is because they are worried that they will lose the deal. In Chapter 3, we discussed building your BATNA, which is your best outside option for the negotiation. Your BATNA will provide you with your biggest source of power in any negotiation. By developing a strong outside alternative, you can reduce your fear of losing the deal.

Your BATNA is also critical because it drives your reservation point. Your reservation point is your bottom line; beyond this point, you would prefer to walk away with an impasse rather than accepting an agreement. Knowing your reservation point will reduce your fear that you will accept a poor outcome, or take a deal when you should have walked away.

Your BATNA vs. Your Reservation Point

Your reservation point defines the worst outcome that you would be willing to accept. Your reservation point is determined by your BATNA plus or minus any idiosyncratic factors that make you prefer one option over another.

Consider, for example, that you are negotiating with your landlord regarding your lease for the coming year. You know that you need to develop your BATNA, so you visit a number of other buildings and find alternative apartments. Your favorite of these is a nearby apartment you are confident you can get for $2,100 a month. Your current landlord has stated that your rent will be $2,300 a month for the coming year. While your BATNA is an apartment for $2,100, this ...