BATNA

What is BATNA?

BATNA stands for best alternative to a negotiated agreement: what you will do if no deal is reached. It is a real course of action, such as signing with another customer or keeping the current supplier, and it marks the point where walking away beats the offer on the table. Roger Fisher and William Ury of the Harvard Negotiation Project introduced the term in Getting to Yes, first published in 1981. Later editions add Bruce Patton as coauthor.

Why it matters to a revenue leader

In a commercial services deal, the buyer's BATNA might be the incumbent provider or a competing bid. A seller who knows that alternative can price with confidence and can tell when a discount request has little behind it. The seller's own BATNA matters too. A full pipeline makes it easier to hold price, and a thin one tends to show in every concession. The Program on Negotiation at Harvard Law School advises comparing alternatives on equal terms, which in services means checking scope and exclusions before treating a cheaper bid as the same deal.

A facility services seller is renewing a $240,000 annual maintenance agreement. The buyer asks for 15% off, citing a competing bid. The seller learns the competing bid excludes after-hours emergency response, which the buyer used six times last year. With the buyer's alternative weaker than it first looked, the seller holds price and offers a three-year term in place of the discount.