Calculate a Reservation Value
Convert a BATNA into a reservation value using costs, risks, and timing.
Olivia must decide whether a $112/hour client offer beats her BATNA: a $96/hour project with 120 likely hours plus a probable fixed-fee sprint. Reservation value = BATNA value adjusted into the same unit as the live offer. The common trap is comparing headline hourly rates while ignoring guaranteed hours, payment timing, probability, and switching cost. Step 1 Value the reliable alternative: $96/hour x 120 likely hours = $11,520. Start with the alternative that is actually available, not the one you hope appears. Step 2 Probability-adjust the sprint: $8,000 x 70 percent likelihood = $5,600 expected value. BATNA math should account…
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