Page 13 - Becoming a Better Negotiator

After analyzing the subjective and objective factors that make up your BATNA, good negotiators will know their walk-away price. It is also important to estimate the other side’s walk-away price. By this it is not meant that your reservation point, or your estimate of the other side’s reservation point, should be fixed in stone prior to the mediation. One of the purposes of mediation is to share and receive information that may move these calculations.
C. Target Price
Finally, once you know your BATNA and your reservation price, the parties should determine their target price. Mediated negotiations falter repeatedly when one party sends mixed messages. A fictionalized -- but all too real example -- illustrates the point.
Assume Plaintiff has made a pre-mediation demand of $4M. Defendant challenges both liability and damages. After exploring the theories of liability and damages, the obstacles to resolution, and options for mutual gain the parties begin the money negotiation by trading numbers. After a series of near matching moves, the Plaintiff has reduced its demand to $3.0M and the Defendant has offered $750,000. Defendant abruptly announces that $750,000 is all the money they have to offer. In our vernacular, they have reached their reservation point.
Needless to say, this negotiation ends without settlement. Presumably, the Defendant in this example knew its reservation point before the mediation but its negotiation strategy was not designed to inform the
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