The following question was featured in the “Ask the Negotiation Coach” section of the Negotiation Briefings newsletter, April 2010 issue and the advice is still relevant today.
What should I do when a negotiation seems to be all about price, I have no BATNA, and the other side knows it?
This question references the well-known negotiation term “best alternative to a negotiated agreement,” or BATNA, coined by Roger Fisher and Bill Ury in their seminal book Getting to Yes (Penguin, 1991). Even though it’s a question I hear regularly, it’s not entirely accurate as a matter of negotiation vocabulary. You always have a BATNA, but your BATNA might be an unacceptable outcome for you or your organization.
Obviously, the first step when you’re in this situation is to try to improve your BATNA by pursuing other negotiation opportunities.
Those familiar with negotiation concepts will also know to look for potential value-creation (“win-win”) opportunities that move the negotiation beyond price haggling.
Even when the other side has all the leverage in a negotiation, he has an interest in making the pie as big as possible, because that will allow him to claim a bigger piece, too.
But what if you have tried these strategies, your best alternative to a negotiated agreement (BATNA) is still weak, and the negotiation really does appear to be only about price?
Business Negotiation Techniques for Dealing with Price Concerns
In this negotiation situation, I recommend three moves:
- Create uncertainty as to whether your BATNA is, in fact, as weak as the other side thinks it is.
- Change the negotiation metric.
- Appeal to the other side’s sense of fairness.
To illustrate these points, consider the case of a Boston-area homeowner who was looking to add approximately 15 feet of a custom gutter to his house.
The job required the same type of custom-made molding that a contractor had installed around the entire house a few years earlier. No one else would be willing to invest in making custom moldings for such a small job, and the original contractor knew it. When the homeowner called to get a bid, the contractor bid $2,000 for what was likely a half-day of work. To give the impression that the bid was being “shopped around,” the homeowner didn’t reply for a week. Finally, the homeowner called back with an allusion to a competition: “I’d really like to go with you, but $2,000 is way beyond the going rate.”
Instead of coming back with a counteroffer, the homeowner then changed the metric: “How about we go forward on a time-and-materials basis?”
The contractor couldn’t reasonably object to being paid based on time and materials, but he knew this metric would earn him significantly less than $2,000. He resisted the move: “In this economy, all my customers are asking me to sharpen my pencil a bit, so I’ll be willing to do it for $1,850.” The homeowner responded with an appeal to fairness: “Look, I want to make sure you’re paid appropriately, but $1,850 for 15 feet of gutter and half a day of work just seems wrong to me. I’ve referred customers to you for several years, and I need you to be fair with me now.” In the end, the parties settled on $1,500—still not a great price for the homeowner, but a substantial concession from the initial offer.
The vignette illustrates your most promising moves when your best alternative to a negotiated agreement (BATNA) is weak and the other side knows it.
What is your go-to BATNA advice? Share with our readers in the comments below.
Related Negotiation Skills Article: 3 Sources of Power at the Bargaining Table
Adapted from “Ask the Negotiation Coach: Bringing a Deal Out of the Gutter,” first published in the April 2010 issue of Negotiation.
Originally posted in 2014.