Distributive negotiation involves haggling over a fixed amount of value—often described as slicing up the pie. In a distributive negotiation, there is usually only one issue at stake, most often price.
When you are negotiating with a merchant in a foreign bazaar, or over a used car closer to home, you are generally engaged in a distributive negotiation. In these situations, it can be difficult to add issues beyond price to the mix, and one party’s gain typically comes at the other party’s expense.
By comparison, integrative bargaining, allows for more than one issue to be negotiated. Whenever multiple issues are present—such as salary, benefits, start date, or flexibility in a job negotiation—negotiators can make tradeoffs across issues and create value.
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It’s also worth noting that what appears to be a distributive negotiation is often integrative beneath the surface. With careful preparation and thoughtful questioning, you may be able to introduce additional issues and move beyond a purely zero-sum interaction.
Still, when you are truly facing a distributive negotiation, preparation matters. The following four strategies can help you claim as much of the pie as possible.
Work to Improve Your BATNA
“Nothing can help a negotiator get a bigger slice of the pie than having a great BATNA,” writes Leigh L. Thompson, a professor at the Kellogg School of Management, in her book The Mind and Heart of the Negotiator. Your BATNA, or best alternative to a negotiated agreement, is what you will do if you fail to reach a deal in the current negotiation. A job seeker’s BATNA might be another job offer, staying in their current role, or deciding to attend graduate school.
You can strengthen your BATNA in distributive bargaining by:
- Researching realistic alternatives
- Actively pursuing multiple options
- Avoiding overcommitment to a single deal
For example, a job seeker with two or three strong offers is far more likely to negotiate assertively than someone with only one option on the table.
Determine Your Reservation Point
In a distributive negotiation, your reservation point is the outcome at which you are indifferent between accepting the deal and walking away to your BATNA.
Suppose you decide you are willing to pay up to $4,000 for a used car. If the seller insists on more than that amount, you will walk away. That $4,000 figure is your reservation point.
It is essential to determine your reservation point before negotiations begin. Without it, you may be swayed by pressure tactics, emotional appeals, or the simple desire to “win” the interaction. Keeping your reservation point firmly in mind helps prevent you from accepting less than you should.
Assess the Other Party’s BATNA and Reservation Point
Of course, you don’t want to aim higher than your reservation point—but how ambitious should you be?
To answer that question, try to estimate the other party’s likely BATNA and reservation point. This requires research and observation. Before negotiating over a used car, for instance, you might:
- Check the prices of similar vehicles in your area
- Look at how long the car has been listed for sale
- Consider the seller’s urgency or lack thereof
The better your understanding of how low (or high) the other party might be willing to go, the more effectively you can set your target.
Determine the ZOPA
Once you have a sense of both parties’ BATNAs and reservation points, you can determine whether a zone of possible agreement, or ZOPA, exists.
The ZOPA is the range of outcomes that both parties would find acceptable. Your reservation point sits at one end of the ZOPA, and the other party’s reservation point sits at the other.
For example, if you are willing to pay up to $4,000 for a car and believe the seller would accept as little as $3,700, the ZOPA runs from $3,700 to $4,000. Your objective is to claim as much value as possible by reaching an agreement closer to $3,700.
If no overlap exists—for instance, if you will not pay more than $4,000 and the seller will not accept less than $4,100—then no ZOPA exists, and walking away is the rational choice.
Distributive negotiations may be competitive by nature, but they are not random. With careful preparation, realistic expectations, and a firm grasp of your alternatives, you can approach even hard-bargaining situations with confidence.
What other advice do you have for those facing a distributive negotiation?
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Build powerful negotiation skills and become a better dealmaker and leader. Download our FREE special report, Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator, from the Program on Negotiation at Harvard Law School.
