One of the most popular articles on this blog is my article on the definition of BATNA. This week I thought I would cover another fundamental negotiation term and define ZOPA. ZOPA is an acronym that means zone of potential agreement. Put simply ZOPA is the range where the parties could agree.
ZOPA by the numbers
If Sam and Al are negotiating over the price of a hamburger, Sam has a minimum price she is willing to take and Al has a maximum price he is willing to pay. Assuming both parties are using a traditional approach to negotiations Al will make a low offer and Sam will reply with a high counter. Each side establishes their bargaining range. The ZOPA is where the parties bargaining range overlaps.
Not that Simple
Rarely if ever is the question of defining a bargaining range as one dimensional as the illustration above. Money is important, but there are surely other things that Sam may value that could alter her bargaining range. Let’s say she recognizes Al as a social media influencer and food blogger. Exposure on Al’s social media channel could be worth way more to Sam than the six bucks she was hoping to get.
Look for Opportunities
Creating value is important in any negotiation. When we find value or the potential for value we should look at our own bargaining range and see what an impact it has on it. If Al is a popular food critic, he may be happy to accept a deal where he posts a picture of the burger on his Instagram if Sam will sell him the burger for $6 and if Sam wanted to be blogged about, she may consider the exposure in her requested price. Sometimes the opportunity is as simple as future relations and sometimes it will be much much bigger. In employment settlement the structure of the deal can impact how much money the plaintiff in a case will take home.
The key to creating value is communicating with the other party and staying curious about what they need out of a negotiation. By listening to each other the sides may find they can create better deals. This is why some parties choose to use mediators to help them create all the value they can out of a potential deal.
Anticipate Their Bargaining Range
When you formulate your BATNA it is important to try and take a guess at your other’s BATNA. Being able to accurately detect their BATNA should allow you to anticipate their potential bargaining range. From there you can plot a path to negotiate a deal with maximum value for you.