Reservation Value in Negotiation

The reservation value or price is the least favourable price that can be accepted in an agreement. It should not be confused with BATNA, since BATNA is generated outside the negotiation, while the reservation value is produced within it.

During the negotiation, define your reservation value:

  • Do you know the least favorable price you could accept in your negotiations?
  • What value have you sacrificed for the reservation price?

The reservation value is not something that you decide on spontaneously. It is something that you have to investigate by doing benchmarking.

A good example is that of ‘The Beatles’ manager, Brian Epstein.

Epstein screwed up while negotiating The Beatles’s movie rights because he didn’t have enough information. He hadn’t benchmarked enough, he didn’t know the share of the rights for actors and he accepted a deal that was not the best that he could have accepted. Despite being a magnificent manager, in this case the other negotiators beat him.

Finding this price may make time, but it will be an investment that will bring you benefits, since it will reveal very important information: you will know if you have negotiated well or poorly and you will be able to find out when you should stand and defend your position or withdraw without losses.

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