Financial Resource Center

Money Management

Negotiate Your Way to a Better Price

by Danielle Dresden / September 19th, 2011

What networking is to careers, haggling is to personal finance. At least, that's how it seems. Just as everyone knows schmoozing helps you get ahead, but not everyone likes doing it, there's a growing understanding that prices can be negotiable—for those willing to haggle. Maybe eBay and Priceline set the stage, by encouraging consumer bidding. Then the Great Recession turned a trend into a virtual necessity. American Research Group surveys revealed that the number of consumers asking for deals increased from 56% in October 2008 to 72% in May 2009.

Haggling in context

The apparent rise of haggling doesn't surprise Robert Spector, author, retail historian, and customer service speaker. "Everything old is new again, especially in retail," Spector says. "Haggling used to be how retail was done. It wasn't until the mid 18th century that there were fixed prices. "Customers have always tried to outwit shopkeepers," Spector continues. Before set prices, people dressed down and tried to look poor, he explains, hoping shopkeepers would feel sorry for them and offer a better price. While haggling faded in some places because shoppers wanted to know what they were buying and how much it cost, its resurgence stems from consumers' need to stretch their dollars and merchants' need for customers. "Retailers are running after whatever ways they can find to get sales," Spector says. They're bargaining on items beyond cars, such as major appliances, fashions, jewelry, hotels, high-end furniture, nursing home care, and meat.
The Great Recession has turned a trend into a virtual necessity.
Yes, meat.

A way of life

In other countries, haggling is expected. Yet haggling still makes some Americans nervous. A 2009 Consumer Reports survey found that 66% of consumers had tried haggling in the previous six months, but only 28% haggled "often" or "always." Maybe the word "haggling" is the problem. It sounds petty and cheap, although haggle pros say it doesn't need to be. "Haggling has to be done in a civil way," Spector suggests. What about calling the process "negotiation"? Daniel L. Shapiro, associate director of the Harvard Negotiation Project and co-author, with Roger Fisher, of "Beyond Reason: Using Emotion as You Negotiate," says there are two basic approaches to negotiation. "The first focuses on positions and the second focuses on underlying interests," Shapiro says. "The first is adversarial and the second is collegial. You may have to think less with the first, but you'll also get less. You may reach a deal more quickly, but you won't be extracting full value from the transaction." Negotiations based on positions—such as "I'll pay $5,000 for this used car"—are more likely to get stuck and create conflict. "There is a different way. You can look beneath people's positions at their underlying interests," Shapiro explains. "Then the conversation turns into 'Each of us has interests. How can we work together to meet them?' "
Think of "haggling" as "negotiating."

All you need is guts—and a little info

When it's done well, haggling is not about winning or losing. That's why successful hagglers love it. The give-and-take make haggling enriching on multiple levels. Still, potential savings are more likely to sway the haggle-averse. When Shapiro asked his MIT Sloan School of Management class to practice negotiating techniques, in one week 45 students saved $15,000 on clothes, cell phones, wedding planning, and more. Start by doing a bit of research to calm new haggling jitters. "Many stores, like Best Buy, are willing to match a competitor's price—if you can prove it," Spector says. Next, develop bargaining ideas. Salespeople often work on commission, so include noncash benefits, like free delivery. Get creative, but base your ideas on underlying interests, such as a car dealer who needs to clear the lot, or a parent who needs a vehicle with cup holders.

Top 10 haggling tips

When you're ready to try negotiating, consider these proven tactics:
  1. Build rapport. "Your goal is to establish an authentic connection, not a manipulative one," Shapiro says. Finding common ground as golfers or parents of picky eaters can shift the relationship from "me vs. you" to "we."
  2. Never bully. Successful haggling creates win-win situations and forges partnerships. "It comes down to human nature," explains Spector. "People are more likely to help people who help them." Making snide remarks about the product doesn't help anyone walk out the door with it—unless it truly is defective.
    Successful haggling is about creating win-win situations.
  3. Bring something to the table. Offer to help the seller by buying in bulk, purchasing a scratched floor model, or buying at the end of the season.
  4. Pick the right time. You're more likely to snag deals after the holidays or at the end of the month when sales quotas loom. Shop during off hours to find sales staff with time to talk, and receptive managers.
  5. Shop with real money. Paying in cash can help savvy shoppers get lower prices.
  6. Never say the first number. Staking out territory doesn't help with haggling. Get the seller to make the first offer.
  7. Don't start too high. Not bidding far enough below your target price is a common mistake. Start as low as possible without being insulting. See why research is important?
  8. Remember, silence is your friend. Don't answer offers immediately. A well-timed sigh can lengthen a pause and prompt something better. If a seller tries this, hold tight and don't negotiate against yourself.
  9. Always ask. Shoppers without coupons can sometimes get discounts, if they ask. If something is already on sale, requesting a little extra could help retailers move the product.
  10. Don't get too attached. Shapiro calls this "identifying your BATNA," or Best Alternative To Negotiated Agreement. Know when you'll walk away, and you'll have the upper hand. But don't go away mad. Go with regret, and leave your name. A salesperson might call with a better deal.
"Haggle in an upfront way, and always show respect," Spector adds. Done right, haggling—or negotiation—isn't about pulling a fast one. It's helping others make you an offer you can't refuse.
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