What is the Reservation Point in negotiation?

• A. The best alternative to a negotiated agreement.
• B. The initial offer you make.
• C. The bottom line in the negotiation.
• D. The amount you are willing to concede in the first offer.

Answer: (C)

In negotiation, your reservation point is the minimum value you’re willing to accept to reach an agreement. It’s your bottom line—the threshold that tells you when to walk away if the offer on the table isn’t good enough. This point is usually set before talks start, based on your alternatives (what you’d do if no deal is reached), your needs, and what you truly value in the deal.

Think of it this way: if the other side’s proposal meets or exceeds your reservation point, you can accept or move closer to a deal; if it’s worse than that point, you should reject and pursue your best alternative. It’s different from your BATNA, which is the option you’ll pursue if no agreement is reached, and it’s not the initial offer or the amount you plan to concede first.

Example: if you’re buying a used bike and you won’t pay more than $500, that $500 is your reservation point. A counteroffer at $510 would be above your limit and you’d reject or push for a price at or below $500.