37 / OpeningNegotiation preparation & claiming value
The decision and the learning goals
Write a preparation brief with internally consistent limits
Distinguish alternatives from aspirations
Evaluate an outcome beyond price alone
90-minute workshopOpening 5 minConcepts and original examples 35 minPractice 25 minDebrief 15 minReview 10 min
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37 / Module caseNegotiation preparation & claiming value
The 2023 Writers Guild contract: preparing for a negotiation over AI and streaming
On May 2, 2023, the Writers Guild of America (WGA) began a strike against the studios' bargaining group, the AMPTP. It ended after 148 days, when writers were cleared to return to work on September 27, 2023, under a tentative three-year agreement ratified in October. The deal had several issues. Minimum pay rose 5% on ratification, 4% in May 2024 and 3.5% in May 2025. Most series must hire at least three writer-producers. On AI, AI-generated material is not literary material and AI cannot be credited as a writer. Writers may choose to use AI with consent, but employers cannot require it, and companies must disclose AI-generated material they hand to writers. Streaming compensation gained a contingent term: a bonus equal to 50% of the fixed residual when a high-budget streaming project is viewed by at least 20% of a service's domestic subscribers within 90 days. Both sides' alternatives changed over the 148 days: lost production and revenue for the studios, lost income for writers. Over the summer the actors' union also went on strike.
Before the strike, what were each side's BATNA and resistance point on AI and streaming pay, and how did the cost of the strike change both? Which terms were mainly about claiming value, and which (like the viewership bonus) let the parties trade on different forecasts?
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37 / TheoryNegotiation preparation & claiming value
BATNA concerns what happens without this agreement
The best alternative to a negotiated agreement is the action available if the current negotiation does not produce an acceptable deal. Its value depends on feasibility, timing and consequences. A hoped-for offer is different from an executable alternative.
A reservation point translates the relevant alternative into the worst acceptable negotiated outcome under stated assumptions. A target is the outcome the negotiator aspires to achieve. Confusing target and reservation point can lead someone either to accept too little or to reject an agreement better than their alternative.
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37 / TheoryNegotiation preparation & claiming value
The bargaining zone describes possible mutual acceptance
A zone of possible agreement exists when some outcomes satisfy both parties’ reservation conditions. In a simple price negotiation, a seller minimum of 90 and a buyer maximum of 120 create a possible zone from 90 to 120.
The existence of a zone does not determine the final price or imply that the midpoint is fair. Information, alternatives, bargaining process and other issues affect distribution. If the parties’ reservation conditions do not overlap, additional issues or changed alternatives may be needed.
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37 / TheoryNegotiation preparation & claiming value
Prepare four distinct concepts
Concept
Meaning
BATNA
Best alternative if no agreement is reached.
Target
The outcome you aspire to achieve.
Resistance point
The point where agreement is no better than the alternative, given relevant constraints.
ZOPA
The range where an agreement can be acceptable to both sides.
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37 / TheoryNegotiation preparation & claiming value
A zone of possible agreement
Illustrative one-price negotiation: seller’s minimum 90; buyer’s maximum 120. The midpoint 105 is not automatically the right target.
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37 / TheoryNegotiation preparation & claiming value
Alternatives create power only in context
Improve real alternatives when possible.
Check uncertain or imagined alternatives rather than treating them as guaranteed.
Consider the counterpart’s beliefs about your alternative.
Information, status, relationships and behavior can also affect the interaction.
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37 / TheoryNegotiation preparation & claiming value
Target and resistance point
A target expresses what you aim to achieve. A resistance point identifies the boundary at which the agreement is no better than the relevant alternative, given the other terms.
Target
Directs ambition and preparation.
Resistance point
Defines the relevant limit or indifference condition. Focusing only on the limit can pull the discussion toward it.
Worked application
Illustrative application: a seller may aim for 110 while having a defensible minimum of 90 under the stated terms. Opening the discussion as though 90 were the desired outcome gives away the distinction. Changes in delivery, risk or the outside option can change the acceptable package.
Prepare both concepts and their reasoning. Do not reveal or apply a limit without understanding the complete package it assumes.
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37 / Source pageNegotiation preparation & claiming value
BATNA as the main source of power
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37 / Source pageNegotiation preparation & claiming value
Anchors weigh more than power (Schaerer, Swaab and Galinsky)
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37 / Source pageNegotiation preparation & claiming value
Research on phantom, imaginary and multiple alternatives
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37 / Source pageNegotiation preparation & claiming value
Target: the aspired goal
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37 / Source pageNegotiation preparation & claiming value
Resistance point (reservation price)
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37 / TheoryNegotiation preparation & claiming value
An opening offer can anchor attention
The source examines how a target and opening offer shape negotiation. An opening can influence the range people consider, but an unsupported extreme can damage credibility or end discussion. Preparation should connect the aspiration to a defensible rationale.
Decide what information to disclose and what questions to ask. Learning the other side’s constraints can improve an offer’s relevance. Do not infer an exact reservation point from a single counteroffer. The counterpart may be communicating a target, a bargaining move or a genuine limit.
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37 / TheoryNegotiation preparation & claiming value
Outcome evaluation includes the process and future relationship
A negotiated number is one part of the result. Implementation quality, clarity of commitments, satisfaction and the future relationship can also matter. The source distinguishes the negotiator’s attention and experience from monetary outcomes.
Specify evaluation criteria before the negotiation. Otherwise a favorable comparison with an arbitrary opening may feel like success even when the agreement performs poorly against the alternative. A debrief should examine preparation, information gained and opportunities missed, as well as the final terms.
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37 / TheoryNegotiation preparation & claiming value
An opening offer influences the conversation
An anchor can affect subsequent judgments.
An unsupported or extreme offer can also damage credibility or the relationship.
Use information and preparation rather than a memorized universal opening rule.
Plan concessions in relation to priorities and new information.
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37 / TheoryNegotiation preparation & claiming value
A preparation brief
Question
Record
What do I want?
Target and priority issues.
What if we disagree?
BATNA and uncertainty about it.
Where is my limit?
Resistance point and constraints.
What might they value?
Evidence, hypotheses and questions.
How will we proceed?
Offers, information exchange and decision authority.
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37 / TheoryNegotiation preparation & claiming value
Evaluate more than the final number
Instrumental result: resources and terms.
Self-image: whether you acted consistently with your standards.
Process: voice, fairness and how agreement was reached.
Relationship: trust and the ability to work together later.
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37 / TheoryNegotiation preparation & claiming value
A useful debrief
Compare with your initial target and alternative.
Examine what you learned about the other side.
Identify an avoidable concession or a missed issue.
Choose one behavior to change next time.
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37 / Source pageNegotiation preparation & claiming value
Bargaining zone (ZOPA): a worked number line
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37 / Source pageNegotiation preparation & claiming value
Midpoint bias
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37 / Source pageNegotiation preparation & claiming value
Three comparisons for evaluating performance
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37 / Source pageNegotiation preparation & claiming value
Negotiator focus, outcomes and satisfaction
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37 / Source pageNegotiation preparation & claiming value
The Subjective Value Inventory
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37 / ApplicationNegotiation preparation & claiming value
A midpoint without a reason
A fictional buyer can accept up to 120 and a seller at least 90. One side immediately proposes 105 because “splitting the difference is fair.” That result may be acceptable, but it says little about alternatives, priorities or the process that produced the range.
Which information should guide a target and offer?
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37 / Current practiceNegotiation preparation & claiming value
Current practice: AI agents and negotiation preparation
AI agents negotiating with each other
In February 2025 MIT researchers (Vaccaro, Caosun, Ju, Aral and Curhan) ran a competition in which participants from more than 40 countries wrote prompts for AI negotiating agents, producing over 180,000 negotiations. Warm agents reached more deals and did better on key measures; dominant agents claimed more value when a deal closed but caused more impasses.
Preparation still wins
The top overall agent reasoned explicitly about goals, trade-offs and concessions before making offers, which is the classic preparation brief carried out consistently. One strong value-claiming agent used prompt injection to try to extract the counterpart's private information. That is a reason not to put your resistance point into a model that a counterpart could interact with.
Using AI on Relay's brief
An assistant can stress-test the Northpoint brief by role-playing Northpoint's CFO or listing questions about the $250 figure. It should not be given patient data or Relay's walk-away price unless the tool's data terms allow it.
37 / PracticeNegotiation preparation & claiming value
Prepare and negotiate a price
Illustrative buyer: maximum acceptable total price 120, target 100. Seller: minimum acceptable total price 90, target 115. Use one product and no other issues for this exercise. If working alone, write a plausible exchange and critique it.
Your task
Prepare alternatives and assumptions, negotiate or simulate, and evaluate the outcome, process and relationship.
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37 / DebriefNegotiation preparation & claiming value
Worked answer and reasoning
The stated acceptable zone is 90–120; an agreement outside it violates at least one stated limit under this packet.
A target is not a promise that the counterpart will accept it, and the midpoint is not an automatic obligation.
Assess how information, offers and concessions affected the result, not only whether a deal was signed.
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37 / Venture stepNegotiation preparation & claiming value
Venture step: Prepare the Northpoint PT negotiation
Relay · venture step 37
Northpoint PT, a 42-location group and Relay's biggest prospect, wants a 3-year contract. List price is 42 x $399 x 12 = $201,096/year; Northpoint asks for $250/location/month ($126,000/year, 37% off list). Illustrative constraints: onboarding capacity means Relay can deploy either Northpoint or its smaller-group pipeline in the next six months, not both. That pipeline is about $150k ARR at a 70% close probability. The deal needs $40,000 of one-off EHR mapping work, and the variable cost of service is 20% of list ($79.80/location/month). Northpoint's alternative is ClinicOS's free bundled waitlist.
Your task
Write a one-page preparation brief: Relay's BATNA in 3-year gross-profit dollars, its resistance point per location per month, a target and opening offer with a rationale, your best estimate of Northpoint's BATNA and limit, the implied ZOPA, and three questions to ask Northpoint.
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37 / Venture stepNegotiation preparation & claiming value
Venture step: worked reasoning
Relay's BATNA (illustrative): expected pipeline ARR = $150k x 0.7 = $105k. With 3% monthly churn, 36-month revenue = $8,750 x (sum of 0.97^t for t = 0 to 35 = 22.20) = $194,242; at 80% gross margin that is $155,394 of 3-year gross profit.
Resistance point: Northpoint is 42 x 36 = 1,512 location-months. Set 1,512 x (P - $79.80) - $40,000 = $155,394, so P = $79.80 + $195,394/1,512 = $209.03, or about $209/location/month ($105,336/year). Northpoint's $250 ask is already above Relay's floor: do not let it anchor the discussion, and do not reveal $209. The $79.80 variable cost assumes v1's 80% margin; at Relay Scheduler's current ≈72% it is $111.72, the BATNA falls to about $139,854 and the floor rises to about $231.
Target $339 (list less the 15% discount Relay already gives for annual prepay: 399 x 0.85 = $339.15), or $170,856/year. Open at $379 (5% volume discount, $191,016/year), justified by the value per location: if Relay fills 40% of about 42 open slots a week against an illustrative 20% for ClinicOS's bundle (Lesson 14), that is 8.4 extra visits x $110 x 52/12 = about $4,000/month per location.
Northpoint's side: its BATNA is the free ClinicOS bundle at a lower fill rate, so on value alone its limit is far above $399. In practice the limit is probably a budget line. Suppose it is $340/location/month ($171,360/year; illustrative and unknown to Relay). The ZOPA is then $209-$340, worth $131 x 1,512 = $198,072 over three years. Each $10/location/month is $5,040/year.
Questions: How was the $250 figure built: budget, a competitor quote, or the ClinicOS bundle? Who signs, and does the budget renew yearly? What fill rate would Northpoint need to see in a first wave of locations to justify list price? Precedent risk: whatever price is agreed will become the reference for the next multi-location group, so the 3-year price is worth more than this one deal.
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37 / DebriefNegotiation preparation & claiming value
Reasoning traps
Letting the counterpart's ask set your frame
Northpoint's $250 already clears Relay's $209 floor, which makes accepting it tempting. The ask is their anchor; respond from the value per location and your target, not from the distance to your floor.
Counting phantom alternatives as a BATNA
Pipeline you hope to have next year is not an alternative you can execute if this deal fails. Discount alternatives by probability and timing, and include capacity constraints that make deals mutually exclusive.
Pricing one deal without pricing the precedent
In SaaS, a large customer's price becomes the reference for the next comparable buyer. The true cost of a concession includes its effect on future deals, so decide in advance which discounts you are willing to see become standard.
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37 / ReviewNegotiation preparation & claiming value
What you can now explain
The Northpoint preparation brief: BATNA ($155k of 3-year gross profit), resistance point ($209), target ($339) and opening ($379) with rationale, an estimated ZOPA of $209-$340, and the questions to ask Northpoint.
A resistance point is calculated from the executable BATNA and the deal's costs. For Relay that is about $209/location/month, which is not the same as the counterpart's ask or your target.
First offers and targets should be anchored in value and the counterpart's alternatives; weak or phantom alternatives distort ambition in opposite directions.
Evaluate the outcome against the pre-written target, comparable negotiators and the subjective value dimensions, never just against your floor or the counterpart's result.
Next lesson: Multi-issue negotiation, value creation & channels
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Check your understanding
What should you know before making an offer?
Score
Question 1
Using the illustrative figures: Relay's BATNA is worth $155,394 of 3-year gross profit, the Northpoint deal covers 1,512 location-months, variable cost is $79.80/location/month and one-off integration costs $40,000. What is Relay's resistance point per location per month, to the nearest dollar?
Solve 1,512 x (P - 79.80) - 40,000 = 155,394: P = 79.80 + 195,394/1,512 = 209.03. $103 is BATNA divided by location-months with no costs; $250 is Northpoint's ask, not Relay's limit; $339 is a target.
Question 2
Northpoint asks for $250/location/month on 42 locations. By how much does that reduce annual revenue compared with list price ($399), and what percentage discount is it?
Difference per location-month = 399 - 250 = $149; x 42 x 12 = $75,096 per year. Discount = 149/399 = 37.3%. The 59.7% option divides by $250 instead of list, a common base error.
Question 3
Relay's resistance point is about $209 and Northpoint's budget limit (unknown to Relay) is about $340. Northpoint opens at $250; Relay opens at $399. A Relay salesperson proposes $325 'to meet in the middle.' What is the best critique?
$325 lies within $209-$340, so it is feasible. But it is only the midpoint of two strategic openings; this is the midpoint bias. Accepting $250 leaves most of the zone unclaimed simply because the ask happens to clear the floor.
Question 4
Relay's only alternative is a weak one: a pipeline worth far less than the Northpoint deal. According to Schaerer, Swaab and Galinsky's research, what is the main risk when Maya sets her first offer?
A weak alternative works as a low reference point on the negotiator's own offer, and in the study it led to worse outcomes than having none. The remedy is to focus on a countervailing anchor such as the value delivered per location. Revealing a weak BATNA invites a low counter.
Question 5
After closing at $300/location/month, Daniel feels great because 'we ended $91 above our floor.' Maya is less happy. Which evaluation is best?
Measuring against the floor produces satisfaction without performance, as Galinsky, Mussweiler and Medvec found. Measuring against the counterpart is also misleading. Use the pre-set target, comparable negotiators and the subjective value dimensions.
Question 6
A Relay rep says: 'Our BATNA is great: three other 40-location groups might sign next year.' None has had a demo. How should Maya treat this?
A BATNA is what Relay can actually do if this deal fails. Unqualified prospects are phantom alternatives: they raise confidence but cannot replace the deal. Raising the walk-away point on them risks rejecting an agreement better than the real alternative.
Workbook
What should you know before making an offer?
Module output: A negotiation brief, package comparison and individual decision portfolio.
Library
Every original page used in this lesson
10 appear in the slides with notes; the rest are kept here for reference.
Preparing for negotiation: the four conceptsA title page listing BATNA, target, resistance point and ZOPA. Agenda for the pages that follow; the native table defines each term.Halevy - Negotiation Slides · PDF page 3 · top slide
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BATNA as the main source of powerThree claims: your BATNA is most often your biggest source of power; options make you stronger, so work to improve your BATNA; and be sensitive to how your counterpart perceives your BATNA, including when to signal or share it. Power comes from the alternative the other side believes you have, not only the one you have. Preparation therefore includes improving the real alternative and deciding what, if anything, to reveal about it.Halevy - Negotiation Slides · PDF page 3 · bottom slide · in the slides
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Can having a BATNA disadvantage you?A question page that sets up the research on the next page. The answer follows on the next page: a weak alternative can anchor your own offer downward.Halevy - Negotiation Slides · PDF page 4 · top slide
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Anchors weigh more than power (Schaerer, Swaab and Galinsky)The title page of a 2015 Psychological Science article. Its finding: negotiators with no alternative felt less powerful but made higher first offers and reached better outcomes than negotiators with a weak alternative, because the weak alternative acted as a low anchor on their own first offer. A weak BATNA is useful as a floor but harmful as a reference point. Set the first offer from the value created and the counterpart's alternatives, then check it against your floor; the effect disappeared when negotiators focused on a countervailing anchor.Halevy - Negotiation Slides · PDF page 4 · bottom slide · in the slides
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Research on phantom, imaginary and multiple alternativesSummary of three findings: phantom alternatives (uncertain options) make negotiators feel powerful and raise aspirations, counteroffers and distributive outcomes; imagining strong alternatives that do not exist leads to more ambitious first offers and better outcomes; and holding multiple alternatives that are all worse than the BATNA can suppress aspirations. The psychology of alternatives affects ambition even when the alternative is not real. That is useful for setting a first offer but dangerous at the walk-away moment: the decision to reject a deal must rest on the alternative you can actually execute.Halevy - Negotiation Slides · PDF page 5 · top slide · in the slides
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Sources of power in negotiationFive sources (alternatives, information, status, social capital and interpersonal behavior), from Galinsky and colleagues' 'four horsemen of power' (2017), illustrated with photographs of Lyndon Johnson leaning over colleagues. BATNA is one source among several; information about the counterpart's constraints is the one most improved by preparation.Halevy - Negotiation Slides · PDF page 5 · bottom slide
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Target: the aspired goalAdvice on targets: focus on achieving the target rather than avoiding the resistance point; direct the counterpart's attention to their own resistance point by describing their situation without a deal; and avoid round-number goals, since a precise higher number may be a stronger anchor. Two levers in one page: the target sets your own ambition, and talking about the counterpart's no-deal situation moves their attention toward their limit. A precise number signals that the figure was calculated rather than chosen.Halevy - Negotiation Slides · PDF page 6 · top slide · in the slides
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Resistance point (reservation price)Definition: the point of indifference where agreement is as good as no agreement. Always enter with one, but do not dwell on it, because it can anchor you low and lead you to concede too much too early, given that people expect and reward reciprocal concessions. Compute the resistance point before the meeting and then stop looking at it. It is a stop-loss, not a planning reference; your concessions should be planned from the target down.Halevy - Negotiation Slides · PDF page 6 · bottom slide · in the slides
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Bargaining zone (ZOPA): a worked number lineA number line from 100 to 114: buyer's aspiration 102, seller's reservation price 104, buyer's reservation price 110, seller's aspiration 114. The bargaining zone runs from 104 to 110 because the buyer's reservation price exceeds the seller's. Both aspirations lie outside the zone. Each party's target is unattainable if the other holds firm at its limit, and nobody sees the zone directly during the negotiation; each side only knows its own reservation price.Halevy - Negotiation Slides · PDF page 7 · top slide · in the slides
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Midpoint biasA diagram of the seller's and buyer's ranges overlapping between the seller's reservation price and the buyer's reservation price, warning against aiming automatically for the midpoint of the perceived ZOPA. The midpoint of the perceived zone is the midpoint of two opening positions, which each side chose strategically. Splitting the difference rewards whoever opened more aggressively.Halevy - Negotiation Slides · PDF page 7 · bottom slide · in the slides
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How do you evaluate your negotiation performance?A prompt page asking how you, your principal or constituency, and your agent would evaluate performance. Introduces the evaluation framework on the next page.Halevy - Negotiation Slides · PDF page 16 · top slide
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Three comparisons for evaluating performanceA wheel of three benchmarks: your result against your initial aspirations and expectations; your result against your counterpart's; and your result against similar others with the same power, time pressure and alternatives. Comparing against the counterpart is the trap: a deal can be excellent even if they gained more. Aspirations and comparable negotiators are the meaningful benchmarks, and they must be written down before the negotiation.Halevy - Negotiation Slides · PDF page 16 · bottom slide · in the slides
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Negotiator focus, outcomes and satisfactionA bar chart from Galinsky, Mussweiler and Medvec (2002): negotiators who focused on their target price achieved better objective outcomes (about +0.4 standardized) but lower satisfaction (about -0.5); those who focused on their BATNA did worse objectively (about -0.6) but felt more satisfied (about +0.4). Satisfaction tracks the reference point you compare against, not the value you obtained. Focusing on the floor feels good and pays less; this is why the debrief needs the target written down in advance.Halevy - Negotiation Slides · PDF page 17 · top slide · in the slides
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The Subjective Value InventoryFour dimensions from Curhan and colleagues (2006): instrumental outcomes (money, benefits, power), self-image (not losing face, acting on your principles), the process (voice, fairness, ease of reaching agreement) and relationships (impression, trust, foundation for future dealings). In a three-year customer contract the relationship dimension has economic weight: renewals, references and expansion depend on it. Score all four after each negotiation.Halevy - Negotiation Slides · PDF page 17 · bottom slide · in the slides
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Using the Subjective Value Inventory as a road mapThree uses: focus on dimensions where you underperformed your standards, decide in advance which trade-offs you will accept (for example instrumental versus relational), and seek feedback to find blind spots. Practical follow-through on the previous page.Halevy - Negotiation Slides · PDF page 18 · top slide
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Negotiation and information technologyA section title page introducing channels and technology. Channels are covered in lesson 38.Halevy - Negotiation Slides · PDF page 18 · bottom slide
