Haggling as Recreation
Jason Kuznicki on May 13th 2008
I suppose I could just walk over to his office and tell him this, but then… it’s been a while since I’ve posted, and this is a bit of a teachable moment, so… Will Wilkinson writes,
I hate [haggling]. I am terrible at it. As a consequence, I bought nothing in Turkey other than tickets to various things, room, food, and a poster of Ataturk. And I overpaid for all of these things, I’m sure, which has left me a bit bitter about the place. Surely this is inefficient overall, no? I understand the price discrimination argument for haggling, especially in a country with a lot of poverty and tourism. But probably hundreds of my dollars stayed in my pocket because I didn’t have good information about the quality of products and I knew the retailer is better at bargaining over the surplus than I am, so… there was no transaction and no surplus.
Inefficient? Of course it is, if all you consider are the utility of the goods purchased and the sums of money involved. But I suspect that these markets still exist because people — tourists — want to haggle. It’s recreation to many of us who would otherwise shop at Wal-Mart.
Maybe knowing a little economics takes the fun out of it, since those of us in the know will realize that to one degree or another we’re getting a less than efficient price (or are we simply valuing the entertainment less, in a quest — misguided? — for sophistication?). But I don’t imagine that we’re the majority. Hagglers find it fascinating to be able to manipulate prices themselves, when usually this activity is done for them in a market. Meanwhile, the markets back home work even when most people don’t realize how or even that they are doing so.
Filed in The Boardroom
I love haggling or, as I think it is more respectably known around here, negotiating. And I especially love haggling for a new car now, thanks to the internet. Oh, how I love shopping the last e-mailed price from Dealer A immediately to Dealers B, C, D and E and then waiting for what little honor among thieves there is to disappear.
But you have to be able to walk away from the deal to be able to negotiate effectively. Had your friend just pressed the shopkeepers a few times until they said no, then walked off, he would have quickly learned what the real market price was. And, frankly, however markets work in the aggregate, being willing and able to negotiate for, for example, such unique items as real property can make the difference whether one can afford that trip to Turkey or not.
Haggling over Haggling…
Will Wilkinson reports that he didn’t buy as many things as he would have liked on a recent trip to Turkey because the cultural proclivity to haggling left him cold. He suspects this experience is generalizable:
[P]robably hundreds of my dollars …
I agree with DAR, walking away will quickly get to a competitive price of an item.
I was recently hit with the reverse problem on a trip to the Yucatan. When we were away from the cities, the poverty was so high that we did not want to negotiate. A few bucks to us was meaningless, but to the artists/vendors it was a healthy portion of their weekly incomes.
Sometimes we couldn’t avoid negotiations — “Dear, do you like this?,” “Okay, today only $25.” Did we lose maybe $100 dollars on the trip? Sure. But unlike Wilkerson, I didn’t feel ripped off or that the money was wasted.
Negotiation just for fun is totally appropriate in the US or Europe. But it seems cruel to negotiate just for the sake of it with someone who is poor.
The dirty little secret of the American marketplace is that you can haggle almost anywhere you feel like, and you’ll usually get a concession. I’ve done it at Office Depot, Sears, Lowe’s, Kroger’s, CVS, Hollywood Video, etc.
The only time it doesn’t work is: 1) a minimum wage worker who really obviously hates the company is working the till AND 2) a manager is not anywhere handy.
It helps if the item is not a best seller and if you’re buying other items at retail.
I’ve found the most effective tact is to be direct:
“Well, this seems nice, but it’s a little high for my budget, can you knock 10% off?”
Lots of American managers are embarassed to actually be asked to lower the price. (The idea that price is taboo is one of those things marketers have convinced all of us of to help keep prices up). A few will sneer in contempt (the response to which must be, “well, I’ll guess I’ll just have to try my luck at X. They’ve been more accomodating.”); some will nicely say “no”; some will offer a counter-proposal; a good number will just say yes; a few will be truly bewildered. If you ask the minimum wage worker expect most likely a sneer or bewilderment; they’ve never imagined it was possible either. Of course it’s intensely pleasurable when their manager actually gives you the discount, much to the worker’s incredulity (you can almost hear the paradigm shift).
We live in a capitalist society; it’s financial self-defense.
A caveat: one must be fearless and shameless. If you’re a regular, let them know it. Who cares if they think you’re poor? If you are poor, all the more reason to preserve what little money you have. If you’re not, why let them manipulate you out of fear of embarassment?
I don’t negotiate all the time. It does take extra effort and energy. But life is full of hard knocks and you certainly won’t get anything without asking and without asking properly. Practice for the big negotiations with little ones.
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