Our newest column to LJ Investment Research, Money, Men & Mommies by Jessica Coffey, combines our three favorite loves; money, men and being a mom. Ask any group of women what they talk about most often and you’ll hear one of these three answers. Each month you can expect to read about the financial escapades women go through and get tips on how to best solve them. You’ll find out how to pay less, love more and enjoy life! Hope you enjoy our newest addition…
Never Pay Retail Again
Anyone who has ever traveled overseas knows that the buying culture there is open to negotiating prices. When I was a collegian I spent a week in Mexico for Spring Break. It’s where I got my first taste of haggling.
On one of the few nights my girlfriends and I didn’t go out partying that week we happened upon an open air marketplace of sorts. There were numerous booths and stands selling everything from baubles to textiles.
In this kind of environment we all expected to negotiate prices over the things we wanted, it was expected. No one was willing to pay retail.
At home, in the U.S., negotiating the price down for an item happens a lot less. Barely anyone haggles. It makes us uncomfortable, especially when it involves money.
Part of the problem is we don’t know how to haggle as effectively as our European and South American neighbors do. Here are some tips I’ve picked up from my travels abroad.
The first thing you must learn is when and where to haggle. You’d get laughed at if you walked into a convenience store and tried to haggle over the price of a candy bar or pack of gum. There are only certain stores and items you can get away with haggling over price.
Don’t try to negotiate at any store in a shopping mall. Those places are filled with chain stores whose corporate leaders set prices for their goods and who give their customer service representatives virtually no lee-way when it comes to pricing. Instead try retail stores that are not on every street corner. Usually they are smaller, privately owned stores (with the exception of car dealerships).
Look for items that have minor flaws or are out of their boxes. No salesman worth their salt will negotiate with you over a new item that just arrived to their store.
Items that have already been marked down several times are prime targets for hagglers and negotiators. Chances are items that have already been marked down are taking up usable space on a showroom that retailers want to dedicate to newer, more expensive models. Look for items that have multiple price tags or are in the clearance section for this approach.
Big ticket items are prime candidates for price negotiation. Things like furniture, appliances, art, televisions, antiques, mattresses, cars, jewelry, homes and apartment rents are routinely haggled over. The higher the price the more likely a salesperson will be willing to work with you to make the sale!
After you’ve found an item you want to buy avoid looking too interested in it. Don’t touch it too much or comment on its beauty. Act disinterested and walk away, don’t spend too much time admiring it. If a clerk knows you want an item they will not give you their best price.
I’ve found I have the most success bargaining with a shopkeeper when they make the first offer. When I make the first offer I find I usually start too high. To get the best deal never accept a retailer’s first offer. As a rule they never reveal the lowest price they will accept on the first offer.
No matter what price a retailer offers you always look shocked and horrified, even if it’s a much lower price than you are willing to pay. Follow this up with other non-verbal cues that illustrate your unwillingness to pay that price; shake your head no, look the clerk straight in the eye, don’t fidget.
Your offer should always start about 30-50 percent lower than their first offer. If that seems extreme to you, then you’re right. It is. But you won’t be paying that price. Another hard and fast rule of negotiating is a shopkeeper will never accept your first offer. Most likely they will act offended or shocked at your offer. Do not be discouraged, it’s all part of the dance.
When I get to this point of negotiations I have a few tactics I use to get the price down even further. The first thing I always try is to point out flaws with the item. Does it have scratches or discolorations? Point these out to the clerk. This will usually land you a further 10-15 percent discount.
Next try feigning interest in a similar item that is selling for much cheaper. If you are quibbling over a 40 inch television selling for $1500, point to a cheaper 40 inch television and ask what the differences are. This will scare any clerk, because by this point they’ve started to think about the commission they’ll earn if they sell you the higher priced item. Inevitably the clerk will downplay the features of the cheaper item and try to steer you back into the direction of the item you originally haggled over. At this point offer them another price that is lower than their last offer. Misdirection is a strong negotiating tactic for buyers, not sellers.
Usually after a round or two of negotiations I try the incentive tactic. Ask the clerk to sweeten the deal for you. If you are haggling over the price of a sofa and the price isn’t working for you ask the clerk to throw in a chair or rug. The more pieces you are willing to buy, the better deal you’ll get.
Once you are close to a price you are willing to pay ask the clerk if they give discounts for cash payments versus credit card payments. Credit card companies charge merchants to use their services. If you are able to pay in cash shopkeepers may be willing to pass that savings on to you. Also they may be willing to take the tax off the price of the item if paying in cash. If so you’ve scored an even better deal.
The important thing to remember is to take your time while going back and forth with negotiations. Always act as if you are carefully considering each offer given to you. Never rush this process. A hurried haggler always overpays.
For most people, asking for a discount is the hardest part. It can be intimidating or embarrassing. Just remember the very worst thing that can happy is that the clerk says “no.” It doesn’t get worse than that! As long you ask in a polite, reasonable manner and can explain why you think the discount is justified, you will have a pleasant negotiating experience. Always remember that you are in control. You have money in the bank that shop owners desperately want. Most will be willing to work with you to achieve a sale. So as Nike says, “Just Do It!”
Disclaimer All materials in this article are provided as opinion only and may not be construed as personalized investment instruction. No action should be taken based solely on the contents of this information; instead, readers should consult appropriate investment professionals and perform proper due diligence. All securities trading, whether in stocks, options, or other investment vehicles, is speculative in nature and involves substantial risk of loss. We encourage our readers to invest carefully and to utilize the information available at the websites of the Securities and Exchange Commission at http://www.sec.gov and the National Association of Securities Dealers at http://www.nasd.com. This article should be viewed as opinion only, and no financial decisions of any kind should be made based on the opinions presented in this piece. LJ Investment Research is not a registered broker/dealer and does not purport to provide any analysis of any company’s financial position, operations or prospects and should not be construed as a recommendation or an offer or solicitation to buy or sell any security. LJ Investment Research