The Fine Art of Haggling
By Tom Ryan
While common in many foreign countries, haggling for most Americans is reserved for major purchases such as cars and houses. However some are finding better deals by haggling over credit card rates, hotel rooms, medical bills, gym membership fees, as well as at retail.
A survey by Consumer Reports found that 90 percent of those who haggled over furniture, electronics, appliances and even medical bills had received a lower price on at least one purchase in the last three years. Most of the bargainers said they saved $50 or more. In the case of cell phone deals and medical fees, more than a quarter saved at least $100.
Writing in The New York Times, Alina Tugend said many consumers don’t like to haggle because they worry about appearing cheap or being turned down. But hagglers claim the practice is not about looking for a favor; it’s more about earning a minor discount for being a good customer.
“I’ve spent many, many thousands at my dentist,” Sally Greenberg, executive director of the National Consumers League, told The New York Times. So when she needed an expensive procedure, she asked what his actual cost was versus what she was being charged – and negotiated a lower price.
Ms. Greenberg, who calls herself the queen of haggling, estimates that she gets a lower price 90 percent of the time. Like most profitable dealmakers, she never acts aggressive, self-righteous or angry.
“You want to be polite and say ‘could you’ and ‘I’d be grateful,’” she said. “You have to have a fine-tuned sense of what’s fair. Don’t chisel people out of things if they can’t afford it.”
Ms. Greenberg said that department stores are not off-limits to haggling, noting that it’s possible to ask for coupons or find out if the item is going on sale soon or just came off sale. Sometimes, expired coupons are accepted through haggling.
Herb Cohen, author of the best seller, You Can Negotiate Anything, said it helps to think of the practice as negotiating rather than haggling.
“You don’t have to be a phony,” he told the Times. “You can tell the truth. Come in in a genial way, smiling with a low-key pose of calculated incompetence. The key words are, ‘Can you help me?’”
Discussion Question: Is haggling more common than thought across retail? Do you think haggling is positive or negative for retail?
Haggling is a way of life in some countries and cultures. Merchants set prices knowing that they will have to haggle with most customers and reduce the price. By haggling with the customers the merchants make them feel better. There is nothing good or bad about haggling!
After having lived in the U.S. for many years I have lost the art of haggling so when I visit India, invariably I end up paying more for many things than my relatives and friends there!
Retailers who succumb to hagglers (1) get gyp-joint reputations and (2) waste their salespeople’s time. When you give in to a haggler, it isn’t a secret. The winning hagglers broadcast their triumphs worldwide. To have your salespeople spend time bargaining takes time away from discussing features and benefits, learning customer needs, etc. Haggling easily leads to mutual disrespect. And because it seems unfair to them, many salespeople lose respect for managements that give in.
Haggling is only possible when there is someone to haggle with. This rules out haggling at almost all chain stores. Haggling on internet sights is no art–just plug in a low ball price and most will counter with the lowest price programmed into the system. But this isn’t haggling. Neither is talking to a car salesman.
You can only truly haggle with the owner of an item. To haggle, one has to feel the stress of the person you are dealing with, look into his eyes and above all else consider his position. Haggling is not meant to reduce anyone to ashes, only to produce a satisfactory outcome for BOTH parties. Lord knows it can be fun, but it can also lead to friendships that last many years. Unfortunately, our society is not set up to promote these types of business relationships.
The majority of consumers are intimidated by the prospect of haggling for a better price–much like the notion of standing up and speaking in public–we would rather avoid the situation altogether.
Whereas the author underscores the importance of how haggling is approached (be polite, disarming, and respectful), my notion is the art of haggling is practiced in a very limited degree across retail. In most cases, both parties sense more of a lose-lose outcome than win-win.
Negotiating at retail is really no different from what each of us does when we surf the Internet for prices for flights, automobile rentals, hotels, etc. In fact, Internet websites have negotiated for us for any item someone may wish to buy. Save the embarrassment of rejection or being perceived as cheap, the concept of negotiating at retail should not be a foreign exercise for us. All prices are on trial.
The challenge to traditional retailers is to develop a paradigm for dealing with negotiators, e.g., size of the purchase, value of the customer, etc. This phenomena is going to grow in use and retailers need to be proactive rather than lament its presence.
Having grown up in a culture where bargaining for a better deal was not only common, but was expected in most retail establishments, I recognize that customers can save significant amounts by ‘haggling’ (on average 20% to 25%).
On the flip-side, if haggling becomes widespread, retail prices will automatically adjust the mark-up to cushion for haggling (this is pretty much the norm in Asian countries where retailers expect consumers to haggle).
The ability to haggle successfully is an indicator of market power–in markets where market power balance is favor of consumers (most commodity goods will be included here) haggling will be successful. On the other hand where market power resides with retailers, haggling may not yield as much gains (e.g. most premium or innovative goods). Even for commodity goods, as price information access becomes more efficient, marginal profits would approach zero, at which point haggling may not be a worthwhile effort, since you would not expect a retailer to sell at a loss under normal circumstances.
While the fine art of haggling has indeed been around for many years, it is becoming an increasingly more popular sport amongst savvy shoppers whose eyes have been opened by the fine folks at Costco and other deep discounters. If Costco can find a way to offer goods at shockingly low prices, why can’t everyone else?
As shoppers become more and more educated about the retail pricing range and become equipped via personal cell phones for competitive price checks without leaving the store, you can bank on the fact that more haggling is around the corner. The shopper-applied pressure to have the lowest price will, in fact, force out those retailers who do not have efficient base operations in order to remain competitive.
There are cheap people in the world who like “putting it” to the clerk and “winning” over them. I hated dealing with them when I worked the floor and as upper management when they would call and complain we didn’t give it to them. If you think the path to riches is having people like Ms. Greenberg as your customers, court them. If not, a firm price works to establish a brand much better than giving in to petty tactics by a few.
As many have said, there is nothing wrong with asking for a better deal than it being offered. I personally have asked for better pricing at Office Depot, Staples. Best Buy, CompuUSA, and the list continues. All retailers have agreed to lower their prices either to match competitive pricing, or simply not to lose the business.
No one should be embarrassed to ask for a better price. The money that is being spent is hard-earned money, and any dollar saved is beneficial to the consumer. One can also make the argument that it is an economic stimulus. If a consumer is able to purchase three products for the same cost that two products would have cost them, productivity and employment needs to increase to create the third product, which will help stimulate the economy in tough economic times.
How is that for the justification of haggling?!?
I’ve come to the point that it has just become worth asking. Sometimes you get a reduction and sometimes you don’t. Many times I get a response of “while I can’t do anything today, it will be on sale next week or the week after” type of response.
I am of the belief that if you don’t ask on any major purchase, you are losing. The worst that can happen is being told no. With a no or a yes in hand, it’s always a better decision.
I’ve also learned what I call the ‘walk’ method. It’s a little more fun than haggling even yet. But it also requires discipline to never buy the first time. When it comes to major purchases, that’s not such a bad thing in the first place.
Even those that advertise ‘one price selling’ do something when you ask. It’s worth the question.
I do have to admit that I haven’t tried it on a loaf of bread or a can of beans, but it might be interesting.
Growing up on the Lower East Side of New York City, I was introduced to haggling at a very early age. It was not only accepted, it was expected. I never learned the fine art as I found myself embarrassed by the whole experience.
However, embarrassment aside, I do find myself negotiating more and more lately with retailers as they promote “lowest price guarantees” and have the online retail environment to compete with. In other words, if retailers encourage price comparisons, negotiations, etc. they will get customers to use their haggling skills. Even those that aren’t very good at it. As long as both sides know what they’re doing, it’s not a bad thing at all.
First, negotiating or “haggling” is definitely more of an art than a science, although I believe there could be a legitimate argument for the latter.
To me, this “art” is something that NEEDS to be a part of retail, particularly for the small and midsize retailer, for a couple of reasons:
1. We live in a world that is very competitive with big box stores and the Internet, so if you want to stay in business, then you must be savvy enough to know where your margin is and what your profit on a sale must be in order to stay in business with everything accounted for. Then you will be in a knowledgeable position to haggle effectively and profitably.
For example, if you sold the infamous “widget” along with every other retailer in the planet, and your cost to purchase this widget was $4, but by the time you calculate all your expenses indirectly involved in getting that widget to your sales floor, virtual or otherwise, it came to $8, then you mark your widgets $16 to remain profitable. Then you have a customer come in and tell you that they checked with “Wally Widgets” down the street from you who was selling the same widget for $12, and they wanted to know if you would take less for your widget as well.
Because you know it only costs you, collectively, $8 to get your widget to the market and sell it, you can easily say ‘yes’ to the $12 offer, but would it be the best deal to make? I say no. The smart deal to ‘haggle’ would be this:
Sell them the widget for $10 if they agree to purchase 3 widget accessories. Or better yet, sell them the widget for $12 if they agree to join your ‘Preferred Customer Program.’
By ‘haggling’ this type of deal, even though there was less profit on the front end, the retailer puts themselves in a position to profit tremendously on the back end from additional product sales or from repeat business through inexpensive follow up, which is the key to establishing a solid relationship with your customer.
2. Haggling, in and of itself, gives you a perfect opportunity to develop a relationship with that customer, whether they buy from you or not, and any savvy retailer knows that the key to success is selling to customers over and over again.
Using the same example from my first point, let’s say that just the fact that you tactfully tried to negotiate a mutually beneficial “deal” with this customer helped him or her trust you and come into your store again for something else later.
A good general rule of thumb in retail is if you have reasonable pricing for your market, a great presentation for your customer [merchandising and tidiness], and great customer service you can expect people to come back. Not everyone will want to negotiate or haggle, so if you at least entertain the notion and go about it tactfully, it can only be beneficial for all involved.
If you combine this with a unique system for tracking your marketing and capturing the email and/or mailing address of your customers I can assure you that your retail sales will increase exponentially.
Ms. Greenberg has hit the nail on the head. There is nothing written that says you can’t ask. Especially on higher ticket merchandise. I got my new BlackBerry for $0 because of haggling (I did not qualify for an upgrade and the phone would have cost me $349). Any retailer who does not at least listen to a haggler is not providing the best possible customer service.
Haggling is something most of us are not good at. I have a girlfriend that haggles over everything and the rest of her friends just walk away.
It’s not common here so there is not a comfort level doing it. Many times you hear people discuss their vacations and the things they liked least…haggling at the market is usually on the top of the list.
Several years ago companies such as Best Buy and other appliance stores commonly used haggling as the culture for doing business with consumers. Later, most companies instead switched over to more conventional means marking products with retail prices and putting these items on sale from time to time, and agreeing to match the best prices of competitor-stores.
Haggling in retail stores is a stressful experience for most American consumers even for high ticket items. The average consumer feels overmatched by the retailer and lacks confidence that he or she has secured the best price.
Online haggling works better because the consumer can take his or her time to make the deal without the added pressure felt by actually facing the opposite negotiator on the retailer’s home turf.
I remember going to buy a car with my in-laws a few years ago and was designated the “haggler.” I admit for a while it was fun, I will also share that my in-laws were apprehensive as the cost went down thinking they were doing something “bad.”
But at the end of the day, even though there was a reduction of the asking price, cars–like jewelry–are two areas where even though there seems to be room to negotiate, no matter what price you leave with, you always feel like it was still not the right price.
I would prefer if there was just a price and tell me that’s what it is.
Haggling does nothing more than break down the retail selling process. If the price/value relationship is firmly established and the transaction is built around satisfying benefits there is no need for haggling. We only have to look at the automotive industry to see a business model that is completely broken. There is so much excess cost built into the buying of a vehicle due to the haggling mentality and the protective franchise laws auto dealers hide under. Haggling allows non-efficient retailers to continue operating which in the end puts a drag on the macro economy.
I’m one of those that is actually a little embarrassed at haggling but admire those that are truly good at it. I force myself to do it on the big ticket items but have a problem with most purchases. I am amazed at how good some people are at it and how much they seem to enjoy it. They treat it like a game that they enjoy playing as much as they do the actual outcome.
In a difficult economic cycle, the incidence of haggling will increase in all retail environments. However, unless a retailer’s selling culture is set up for haggling, the results will always be negative for the retailer and often negative for the consumer. It is negative for the retailer’s profits because their margin expectations don’t take haggling into account and negative for their sales associates and managers who are unprepared to deal with often-difficult hagglers. It can be negative for the consumer because even if they get a lower price, the process of haggling with an unprepared associate will likely be acrimonious.
Politely asking about pricing options, particularly for more expensive items, is smart consumer behavior. However, haggling in environments not set up for it is just adding to an already-difficult relationship between customers and retailers.
There could be an opportunity for a retailer to set themselves up as a haggling, bazaar-type environment that caters to people who like to shop this way. I doubt, however, that this can be done profitably over many locations due to the difficulty of training this type of selling effectively. An opportunity for single-unit retail entrepreneurs?
Personally, I like shopping where I am confident that the marked price is an acceptable value, and haggling is by definition unnecessary. Costco is the king of projecting this perception.
I’m going to jump in here from the shopper side of the coin and say that I personally love “haggling” and feel that it’s akin to bartering, which I also enjoy.
I participated in a yet-to-be-released documentary about coupon shoppers last year and one of my main shopping points is that even big chain stores have to turn inventory or risk losing money. Perishables, particularly meat, produce, and dairy, can be “haggled” for successfully even in chains like Albertsons and Safeway. All haggling is is looking for the best deal out there. We do it in many arenas, so I’ve never been able to understand why it’s so frowned upon in the retail sector.
Like a business would negotiate with a supplier, haggling between the retailer and the consumer is a way of both sides coming together to make a sale and get the best deal. It gives the individual economy of scale in their own household, particularly when volume is used as a bargaining chip in the negotiation.
I will routinely negotiate with the butcher at Albertsons to clean sweep some of his inventory at night. He is saved the task of individually wrapping the case goods and putting them out on the shelf. He gets to start with fresh inventory in the morning which is a selling point to another customer, and the store shaves some high-dollar labor because he can clock out sooner. I take my find home and freeze it, and I paid about 1/3 of what the sticker was. It’s a win-win all the way around.