BATNA (Best Alternative to a Negotiated Agreement) is what you’ll do if this negotiation doesn’t produce a deal. It is the source of negotiating power: a strong BATNA means you can walk away; a weak BATNA means you can’t.
Example: You’re negotiating with your primary food distributor for a 5% price reduction. Your BATNA is the quote you received from a competing distributor — 3.45. If the negotiation fails, you switch suppliers. The competing quote makes the BATNA strong: you have a real, viable alternative.
If you have no competing quote, no backup supplier, and no ability to source elsewhere, your BATNA is accepting the current price. That’s a weak BATNA — the supplier knows you have no alternative, and your request for a discount carries no weight.
Strengthening your BATNA
Before any negotiation:
- Identify your alternatives. What will you actually do if this deal falls through? Be specific.
- Develop the best alternative. Get competing quotes. Talk to other landlords, suppliers, or lenders. The act of developing alternatives often produces better options than you expected.
- Know the other party’s BATNA. If a landlord has three vacant units and you’re the only prospect, their BATNA (continued vacancy) is weak — even if yours is also imperfect.
BATNA applies to every business negotiation: commercial leases, supplier relationships, financing terms, employee salary discussions, and partnership agreements. The principle is always the same: know your alternative before you sit down.