{"id":1110605,"date":"2019-04-12T13:54:11","date_gmt":"2019-04-12T13:54:11","guid":{"rendered":"https:\/\/dailyreckoning.com\/?p=107186"},"modified":"2019-04-12T13:54:11","modified_gmt":"2019-04-12T13:54:11","slug":"how-to-secure-the-best-deals","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1110605","title":{"rendered":"How to Secure the Best Deals"},"content":{"rendered":"

This post How to Secure the Best Deals<\/a> appeared first on Daily Reckoning<\/a>.<\/p>\n

Want to know how to get the best deal every time? <\/span><\/p>\n

Know your BATNA.<\/span><\/p>\n

BATNA stands for \u201cbest alternative to a negotiated agreement.\u201d<\/span><\/p>\n

The term was coined by Roger Fisher and William Ury in their 1981 bestseller, Getting to Yes: Negotiating Without Giving In<\/i>.<\/span><\/p>\n

BATNA is simply <\/span>the best you can do if the other person refuses to negotiate with you \u2013 if they tell you to “go jump in a lake!” or “Get lost!” So it\u2019s not necessarily your ideal outcome. <\/span><\/p>\n

But understanding this concept is important if you want to save money since a lot of times the bulk of money made or lost is in the initial agreement.<\/span><\/p>\n

Buying a car, negotiating a real estate deal, pushing for a raise all require a basic understanding of BATNA if you want to get the highest return.<\/span><\/p>\n

Another way of looking at BATNA is you can think about it like your limits. <\/span><\/p>\n

What is your BATNA if you don\u2019t purchase or sell?<\/span><\/p>\n

What is their BATNA if they don\u2019t purchase or sell?<\/span><\/p>\n

Once you know both parties limits, or at least have a rough estimate, it makes negotiating easier. <\/span><\/p>\n

Having a good BATNA increases your negotiating power because you don\u2019t need to concede as much if you know you have a better alternative. This puts you in a position where you can push the other side harder. <\/span><\/p>\n

However if your options are slim or non-existent, the other person can make increasing demands, and you’ll likely have to accept them \u2013 because you don’t have a better option. <\/span><\/p>\n

Therefore, it\u2019s important to improve your BATNA whenever you can. If you have a strong one, it\u2019s worth showing your opponent. If you have a weak one, you\u2019re likely better off hiding it. <\/span><\/p>\n

Negotiating is a lot like playing poker: sometimes you make the other players at the table think you have a good hand in order to back off, other times you lure them into thinking you don\u2019t have a great hand so they overcommit and expose themselves. <\/span><\/p>\n

Selling a Car<\/b><\/span><\/h2>\n

Let\u2019s look at a common example, selling a car: <\/span><\/p>\n

Jack needs a car and is negotiating with Cindy to purchase her car. Cindy offers to sell her car to Jack for $12,000. <\/span><\/p>\n

Jack searches on Craigslist and finds a similar make and model which he believes he could pick up for $10,000. Jack\u2019s BATNA is $10,000 \u2013 if Cindy doesn\u2019t offer a price lower than $10,000, Jack will consider his best alternative to a negotiated agreement. <\/span><\/p>\n

Jack is willing to pay up to $10,000 for the car but would really like to only pay $9,000. If Cindy offers a price higher than $10,000, Jack will walk. <\/span><\/p>\n

What we don\u2019t know yet is Cindy\u2019s BATNA. If we assume Cindy can sell her car to someone else for $11,000, $11,000 is Cindy\u2019s BATNA. If this was the case then an agreement likely wouldn\u2019t be met.<\/span><\/p>\n

But if Cindy\u2019s best alternative to the deal\u00a0 <\/span>is selling her car to a dealership, which would offer her $8,000, both parties can come to an agreement.<\/span><\/p>\n

In this case, there is a zone of potential agreement (ZOPA) \u2013 $8,000 to $10,000. In this range, both parties can come to an agreement.<\/span><\/p>\n

How to Find Your BATNA<\/b><\/span><\/h2>\n

As you can see from our example, knowing what your BATNA is makes negotiating a lot easier. If Jack didn\u2019t have a BATNA, Cindy would have had more\u00a0bargaining power. Knowing Jack\u2019s BATNA was at $10,000, the highest price Cindy would be able to sell her car to Jack for is $10,000.<\/span><\/p>\n

\u00a0<\/span><\/p>\n

Harvard Law School\u00a0actually created a process to find your BATNA: <\/span><\/p>\n