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Examples of BATNA

Business example

Let's say that your company has decided to renegotiate the contract with the vendor who provides your company's printer maintenance and service, and you are negotiating the deal. The current vendor provides routine maintenance, service calls and all ink and toner for $12,000 per year, but you don't call on them much, and the primary value is in the supplies rather than the maintenance or service calls. You hope to lower your current vendor's annual fees based on this assessment, or else you will consider other alternative solutions that are more cost-effective.

First, you made a list of possible alternatives based on similar vendors in your area and other options, such as managing supplies and troubleshooting internally and only hiring a repair person as needed. Then, you create a spreadsheet to compare the value of each alternative, including each vendor's fees and provided services. You also calculate how many repairs calls you make per year for your printers, how often your vendor provides routine maintenance and how much toner and ink costs for the printers in your offices.

You decide the BATNA for your company is to have the employees take responsibility for the printers and their routine maintenance. Additionally, your company will purchase ink and toner directly from suppliers and hire a repair company as needed. All of this will cost between $5,000 and $8,000 per year.

You have determined that the most you would pay the current vendor is $11,000 per year, although you would prefer to be closer to $6,000 per year. The vendor is still appealing to you because they offer more comprehensive coverage, and their services may save your company money in the event of repair issues. The vendor has decided that the lowest they would accept is $8,000, but they prefer to be at the current $12,000 rate. You mutually agree upon $10,000 as the fee you will pay them, and the negotiations finish with a deal that satisfies both parties.

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