For Price Negotiators, Preparation is the Key to Success
Some cultures have a long tradition of haggling—bargaining back and forth about the price of an item—in markets and bazaars. By contrast, in the United States and many other countries, haggling between buyers and sellers is an under-practiced skill. You might routinely pass up opportunities to haggle in situations where financial negotiations are not the norm because you’re afraid of offending the seller or because you feel inexperienced or uncomfortable.
When you do so, you’re likely passing up chances to save money. A May 2009 Consumer Reports poll found that among American price negotiators who tried to negotiate discounts in the previous six months, 83% succeeded in getting lower hotel rates, 81% got better deals on clothing and cell phone service, 71% negotiated cheaper electronics and furniture, and 62% lowered their credit-card fees.
The following tips will help you become a better price negotiator.
Build powerful negotiation skills and become a better dealmaker and leader. Download our FREE special report, Negotiation Skills: Negotiation Strategies and Negotiation Techniques to Help You Become a Better Negotiator, from the Program on Negotiation at Harvard Law School.
1. Take the Negotiation Seriously.
We tend to assume that “small” negotiations—for a new TV, for example—don’t warrant the type of thorough preparation that we conduct for business deals at work, but that’s incorrect. If you aren’t ready to negotiate, you could sacrifice more value than necessary or pass up on a good deal. It pays to apply your business negotiation skills to your current challenge.
Wise price negotiators begin with a thorough consideration of their BATNA, or best alternative to a negotiated agreement—the action they’ll take if a particular negotiation ends in impasse. In the case of a television, your BATNA might be a low, no-haggle price from an online retailer or it might be to repair your current TV.
Knowing what you will do if you can’t get a good deal will give you bargaining power during the negotiation that follows. Your BATNA also helps you calculate your reservation price—for the seller in a price negotiation, the most you’d be willing to bid—as well as your negotiation goals, or the deal you are hoping to get.
Assess the other party’s reservation price and BATNA as well by conducting online research and studying store policies concerning discounting, returns, and warranties. In the store, inventory tags often indicate how long an item has been on the shelves. Salespeople may be more willing to haggle over merchandise that has been sitting on the floor a long time, notes Consumer Reports.
2. Establish the Right Setting and Tone.
Consumer Reports advises price negotiators to haggle early or late in the day, when stores are often quiet, and late in the month, when salespeople may be especially eager to meet quotas. At chain stores, where regular sales staff may not have the power to haggle, you might need to approach a manager.
Open negotiations out of earshot of other customers, recommends Consumer Reports, as sales staff may not want others to get wind of your haggling. Bring along up-to-date information about competitors’ prices and be prepared for the salesperson to verify it.
Be polite and cordial throughout the negotiation process, and also be willing to accept no for an answer. Finally, because stores typically pay fees on credit-card purchases, keep in mind that salespeople may be more willing to bargain if you offer to pay in cash.
3. Beware Tricky Tactics.
If you’ve done your homework, you should be in a good position to negotiate. But first, you may need to determine whether negotiation is even possible.
“I can buy this TV online this weekend at a much lower price,” you might say after talking to a salesperson about the features of the item you desire in a showroom. “Can we work together toward a more competitive deal?”
If the salesperson is willing to negotiate, and if you have a strong sense of the zone of possible agreement, or ZOPA, you have entered the realm of haggling—the dance of concessions that follows each party’s first offer. Keep your BATNA at the forefront of your mind. Knowing that you have a good alternative will help you stay calm and rational as a price negotiator.
Experienced price negotiators tend to extend the time between their concessions in the hope that you will grow nervous and make a better offer before they need to reciprocate. But it would be a serious mistake for you to make an unreciprocated concession. Wait out stalling tactics, and insist on receiving a concession in return for one of your own. If no concession is forthcoming, thank the salesperson and prepare to leave. Your imminent departure could inspire a counteroffer; if not, you should feel comfortable turning to your BATNA.
Finally, although price might be the most important issue at stake, you could sweeten the deal for both sides by discussing other issues, such as delivery, financing, and the possibility of repeat business. By accepting tradeoffs on such issues, you could get a better price.
Do you have any other haggling tips for price negotiators?
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