BATNA - Best Alternative To Negotiated Agreement. If you subtly imply that you can walk away and buy elsewhere, then you can talk them down. You lose a bit of time, they lose their commission. If you know what their commission would be (or you can make an educated guess), you can talk them down a long way.
But if you behave as though you must buy there, they have no reason to drop the price.
"Best alternative to a negotiated agreement" (BATNA) is from 'Getting to Yes: Negotiating Agreement Without Giving In', Fisher, et al. The idea is that you want to be aware of what your options before entering a negotiation.
OK, if you must have a specific item or service today, then your bargaining power is significantly reduced. Your BATNA (best alternative to a negotiated agreement) is to pay full price from the specific person you're talking to. If your seller detects that through your words or actions, you will always pay full price.
I'm saying that being able to walk away (even if you don't) is your most powerful piece of negotiating leverage. If you go into a negotiation without the ability to walk away, you're in a very weak position, indeed.
This is known as the Best Alternative to a Negotiated Agreement, or BATNA, and it's a pretty helpful concept: the better your next best option is, the better position you will be in to negotiate.
(n.b.: BATNA is 'best alternative to a negotiated agreement', which is exactly what it sounds like. Think of it as the negotiating equivalent of the 9-5 you can always go back to if your startup fails.)
BATNA stands for Best Alternative To a Negotiated Agreement. In other words, it's your plan-b if you don't accept the current offer. It's a fairly common acronym when discussing negotiations, and is also spelled out in the article.
The BATNA (https://www.investopedia.com/terms/b/best-alternative-to-a-n...) is definitely important, but it is all about being willing to walk away. The multiple offers obviously helps with this, but that doesn't mean that you can still leave a lot of money on the table if you negotiate badly. If you have an offer from FAANG and one from another company the one from the other might still be lower than a low-ball offer from FAANG.
Negotiating courses often refer to this as the BATNA (best alternative to a negotiated agreement). Considering what that scenario is and having it as your bottom line is the best piece of advice they impart.
The strategy you outline is classic BATNA. Your BATNA is your best alternative to negotiated agreement - your walk-away position. The stronger that is, the more leverage you have in negotiating. By improving lead times, your friend improved his BATNA, as you say, so much that he no longer needed the negotiation.
I've always found this to be the trickiest, both in terms of defining it (in advance of a negotiation) and being willing to stick to it (during the discussion). Sometimes understanding that the BATNA is just the time saved can be helpful.
NB It's related to other advice that 'deals exist in order to fall through'.
Not a red flag, but you should always know what your next-best alternative is. The best alternative to a negotiated agreement (BATNA), prevents you from agreeing to something that is actually worse than just walking out when you are negotiating something - like a job.
Read Fischer & Ury's Getting to Yes if you have time. Great little book on negotiating. One of their main pieces of advice is, before entering any negotiation, work out your BATNA - Best Alternative to a Negotiated Agreement.
A BATNA is not the lowest price you're willing to accept in a negotiation, but rather what you would do if the negotiation never occurred in the first place. Bootstrap your product, try to gain traction, profit? Raise angel/VC money, work towards an exit strategy? Apply to YC?
Once you have that figured out, you can enter into a negotiation with a much better idea of the value of your product to you. If there is overlap with that and what the other company is willing to offer for it, then you can make a win/win deal.
It also helps to have some idea of the value of your product to the other company, as you do.
BATNA stands for "Best Alternative to a Negotiated Agreement," which applies specifically to situations where you are in multi-party negotiations. The term doesn't generalize to "alternative strategy." I think maybe the term you were looking for was "opportunity cost."
But if you behave as though you must buy there, they have no reason to drop the price.
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