ZOPA
Zone Of Possible Agreement
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ZOPA Definition
ZOPA stands for Zone Of Possible Agreement, and it refers to the crossover point where two parties encounter terms they can accept, and therefore reach a conclusion that all involved are happy with. Not all negotiations will have a ZOPA, since the point that two parties are willing to go to may not be close enough to each other. If your negotiations result in an agreement which is in your ZOPA, then the negotiations have been successful.
What is ZOPA?
A ZOPA is the price range in a negotiation which covers an area that both parties would be willing to agree to. It can be hard to reach a ZOPA without knowing what the other party has set as their reservation point. The zopa meaning can be easier to understand using an illustration.
For example, Carol wants to sell her car for £15,000, but she would be willing to sell it for as low as £13,500 because this is the amount she needs to put down as a deposit on her new vehicle. Jenny wants to buy Carol’s car. Ideally Jenny would like to get the car for £13,000, but she is willing to pay a maximum of £13,800. This means that the ZOPA for Carol and Jenny’s negotiations is between £13,500 and £13,800. If Carol and Jenny are able to reach an agreed price within this price range, they will both have walked away from the negotiation with a deal they are happy with.
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