Know your walk-away point

Before you bargain, know what you will do if there is no deal. That sets the least you should accept, and any deal lies between your walk-away point and theirs.

Roger Fisher and William Ury, in Getting to Yes (1981), call it your BATNA: your best alternative to a negotiated agreement. It is the standard any offer must beat. They argue that the better your BATNA, the stronger your hand, so the most useful work is often done before the talks: finding and improving your other options.

Howard Raiffa, in The Art and Science of Negotiation (1982), turns the same idea into numbers. Each side has a reservation price, the point at which it would rather walk away. If the buyer’s top price is above the seller’s bottom price, there is a zone of possible agreement between them, and any deal in it beats no deal for both. If not, no deal is the right result.

Work out the other side’s walk-away point too: what will they do if you say no? And keep your own to yourself. When you know what the deal is worth, a confident first offer with reasons behind it tends to pull the result towards you. When you do not, find out before you name a number. See also: act with more information.

Why it matters

A deal is worth taking only if it beats your best alternative to it. Knowing that alternative tells you when to say yes, when to say no, and how hard you can push.

Away from the game

Before a salary talk, a supplier contract or a sale, find your best other option and improve it if you can: another offer, another supplier, another buyer. Then you know the least you will take, and you can walk away calmly when a deal falls short of it.