price negotiation http://www.wisebread.com/taxonomy/term/3764/all en-US The 7 Laws of Negotiation http://www.wisebread.com/the-7-laws-of-negotiation <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-7-laws-of-negotiation" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/3730302812_f8da5d1abe_z.jpg" alt="haggling" title="haggling" class="imagecache imagecache-250w" width="250" height="168" /></a> </div> </div> </div> <p>Sometimes, it takes an economic downturn for folks to rediscover a lost art. I've heard all the buzz lately about people beginning to negotiate the price of everything from new shoes to cell phone plans. When we see companies slashing prices and luring us in with incentives and other goodies, we rightly begin to wonder just how firm the price was in the first place. Finally, America is taking the haggle out of the used car lot and applying it a bit more liberally. (See also: <a href="http://www.wisebread.com/deal-killers-5-phrases-to-avoid-when-negotiating">5 Phrases to Avoid When Negotiating</a>)</p> <p>For some of us though, the art was never lost, and we constantly marvel at how readily some folks hand over cash before employing a few simple and time-honored &quot;tools of trade.&quot; Over the past couple of decades, I've distilled successful negotiating down to seven key principles that can help the newbies out there and serve as a refresher to those who might be getting rusty:</p> <h3>1. Come prepared.</h3> <p>Never begin to negotiate on the price of an item that you haven't researched and understand the value of. In order to get the best deal, it's essential to know what the market supports for the item in your area. Ask yourself: is it a good deal to begin with? What have other items like it sold for recently? How is this one better or worse? What's my ideal price and what's my maximum price?</p> <h3>2. Be polite.</h3> <p>Negotiating should be less of a battle and more of a dance. Have a conversation with your seller, kick the dirt, and find some common ground. Realize that both parties have an investment in the outcome, and that a happy seller is as important as a happy buyer. Sellers who leave feeling like you drove a hard but fair deal will be more likely to &quot;dance&quot; with you again.</p> <h3>3. Don't make the first move.</h3> <p>This is where a bit of psychology comes in. If you're in a situation where the price of an item is not stated, let the seller toss out the first number. Whoever quotes this magic figure first takes the most risk in negotiation &mdash; is the price so outlandish that the seller has alienated the buyer? Is it so low that he could have gotten twice that amount? If you can't avoid naming the first price, opt for a fair, if slightly low-ball offer. Remember, you can always increase your offer, but decreasing it is like trying to unlay an egg.</p> <h3>4. Time it right.</h3> <p>Don't start haggling the minute you meet your seller...or worse, on the phone or in email. A few months ago, I was selling some antique furniture and advertised one piece online with the photo and price. I got three calls within an hour from folks asking me to come down on my price before they even went to the trouble of coming over to see it. This method is tactless and shows little skill and even less effort. (See also: <a href="http://www.wisebread.com/the-9-secrets-of-highly-successful-craigslist-sellers">9 Secrets of Highly Successful Craigslist Sellers</a>)</p> <h3>5. Get creative.</h3> <p>Negotiating on price is the most obvious way to employ your skills, but there are many other things that can tip the deal in your direction. Don't get stuck on dollars and forget other factors that can equal dollars. If the item is large and hard to move, ask the seller to include delivery. How about a few lessons on how to use that guitar instead of the $20 discount you're looking for? Maybe that cell phone carrier would include a free car charger and earbud to win your business.</p> <h3>6. Be able to walk away.</h3> <p>If you're working hard on a deal that you believe just isn't going your way, be prepared to politely wrap things up and walk away. Remember, in the game of negotiation, walking away is the ultimate card to play, so don't overplay it or play it before you're ready. Typically, seeing a potential buyer heading toward the door will motivate most sellers to make a deal.</p> <h3>7. Flash the cash.</h3> <p>If you've gone to all the trouble to close a sweet deal, don't spoil the moment by not having cash in-hand. Remember, cash is still king &mdash; showing up with the green is a huge bargaining chip in itself. Leaving to hit the ATM gives your seller time you don't want him to have &mdash; time to reconsider or get a better offer. Oh, and while we're on the topic, have exact change. There are few things that show worse form than explaining your tight financial circumstances to a seller and then sorting through your c-notes to pay for that $40 bicycle. Think in advance and expect success &mdash; have the money ready.</p> <p>In the end, experience will teach you a lot and give the extra bit of courage needed to start the conversation about price. You'll be surprised how flexible most pricing is and soon learn to see opportunities that you didn't before. Even traditional retail stores aren't above a bit of &quot;creative pricing&quot; especially if they're locally-owned and it's near the end of the month or the sales quarter. Remember, be bold and follow the strategies above for a lifetime of rewarding negotiation.</p> <div class="field field-type-text field-field-guestpost-blurb"> <div class="field-label">Guest Post Blurb:&nbsp;</div> <div class="field-items"> <div class="field-item odd"> <p>This is a guest post by Kentin Waits. Kentin has worked in web marketing for 13 years and run his own eBay business for 10. In 2009 he published two articles for Backwoods Home Magazine and is currently working on a page-a-day desk calendar on the topic of financial empowerment.</p> </div> </div> </div> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/kentin-waits">Kentin Waits</a> of <a href="http://www.wisebread.com/the-7-laws-of-negotiation">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/chinese-money-habits-how-my-culture-influences-my-attitudes-toward-money">Chinese Money Habits - How My Culture Influences My Attitudes Toward Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-trick-salespeople">6 Ways to Trick Salespeople</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-do-you-do-when-negotiations-stall">What Do You Do When Negotiations Stall?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/breaking-the-bread-code-how-to-get-the-freshest-loaf">Breaking the Bread Code: How to Get the Freshest Loaf</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-ways-to-spend-less-on-your-significant-other-and-not-get-killed">9 Ways to Spend Less on Your Significant Other (And Not Get Killed!)</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> General Tips Shopping barter haggling price negotiation Mon, 15 Mar 2010 17:00:06 +0000 Kentin Waits 5728 at http://www.wisebread.com Variable prices, and what economists like about them http://www.wisebread.com/variable-prices-and-what-economists-like-about-them <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/variable-prices-and-what-economists-like-about-them" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/esperanto-book-service.jpg" alt="Shoppers browse Esperanto books" title="Esperanto Book Service" class="imagecache imagecache-250w" width="250" height="151" /></a> </div> </div> </div> <p>From the buyer&#39;s point of view, a &quot;market price&quot; is great. This is not only because he or she doesn&#39;t have to get a bunch of prices quotes to avoid being cheated, but also because the market price is almost always lower than the maximum amount the buyer would be willing to pay. The seller, though, much prefers variable prices--ideally, with each buyer paying his or her maximum price.</p> <h2>My discovery of the Consumer Surplus</h2> <p>One time, back when I was in college, I happened upon a book that I really wanted to read. I&#39;d known it existed, because I&#39;d seen it listed on an &quot;other works by this author&quot; page, but I hadn&#39;t been able to put my hands on a copy. There it was, though, on the shelf at the bookstore. I snatched it up and took it to the cash register without even looking at the price.</p> <p>At the time, prices for paperback books were running around $1.95 to $2.25, but I would have cheerfully paid $3 for that particular book--and would probably have grudgingly paid even more than that.</p> <p>When I got to the register, though, it turned out that book was only $1.75. What a bargain for me!</p> <p>I was taking an economics class at the time. I described my experience to my professor, and was pleased to find that economists have a name for what I&#39;d discovered: the difference between the market price and the maximum amount that a buyer would have paid is the &quot;consumer surplus.&quot;</p> <p>Practically everything you buy has a consumer surplus. Those items that you toss into your basket with barely a thought have a large consumer surplus. The ones that you stand in the aisle with the item in your hand, right on the cusp between putting the item in your basket, or put it back on the shelf--that&#39;s where the consumer surplus is close to zero.</p> <h2>What would a seller do?</h2> <p>Sellers, of course, hate to sell anything with a large consumer surplus--they&#39;re making less profit than they could. Oh, they&#39;re perfectly happy for there to be a consumer surplus on some items--cheap turkeys at Thanksgiving bring in shoppers who pay little attention to the price of all the other items they need for their feast. But they&#39;re not interested in there being a consumer surplus, except as a ploy to bring in other profitable business.</p> <p>From the seller&#39;s point of view, the ideal situation would be one where you haggle over prices, and where the seller has a telepath reading your mind to figure out the most you&#39;re willing to pay. The seller has a rock-bottom price (where they make just enough profit to be worth the trouble to process the transaction), but almost every transaction is at a higher price, based on what the buyer is willing to pay.</p> <p>Sellers don&#39;t actually do that, and not just because they can&#39;t find the telepaths. A buyer who is charged more than the next guy feels taken advantage of, and will take his business elsewhere, if the opportunity presents. There&#39;s also the standing-in-the-aisle problem mentioned early--get the consumer surplus close to zero on every item, and the buyer will end up taking forever to close the deal.</p> <h2>Without telepaths</h2> <p>Those issues aside, though, plenty of businesses charge variable prices. Airlines are the classic example. Ever checked the price of a ticket one day, and then tried to find the ticket for that price the next day? If you ever succeed at that, you should rush right out and buy a lottery ticket, as it is obviously your lucky day. But lots of businesses charge variable prices in the form of specials and coupons.</p> <p>Where I live, there&#39;s a nearby pizza delivery place that has a special deal for a one-topping medium pizza ordered for pickup on a Monday. The price is about half what the pizza would be if you ordered it any other day of the week, or if you ordered it for delivery. I&#39;ve gotten one of those pizzas several times. The place is walking distance (even carrying a pizza), the price is right, and the pizza is pretty good.</p> <p>Unable to spot the people who&#39;d pay top dollar for a pizza, the pizza place sets the price as high as they dare--any higher and too many potential customers would glance at the menu and then go somewhere cheaper. Then they offer deals calculated to bring in the people who won&#39;t pay that much, trying to configure them so that they don&#39;t end up cannibalizing their higher-priced sales.</p> <h2>Those darned economists</h2> <p>Economists think variable pricing is good. They especially like it in situations where you otherwise have lines forming. A toll bridge that charges higher tolls during rush hour, prompting drivers with flexibility in their schedule to come earlier or later to get the better price, is the classic example. They also like it when it makes sure the limited supply goes to the people who want it most. For example, they&#39;d like a vending machine that started raising its prices as it approached empty, trying to stretch out its dwindling supply of soda until it gets restocked. (An empty vending machine in front of a guy with money in his pocket is a very sad sight to an economist.)</p> <p>Economists are thwarted in their vision by consumers who get all bent out of shape when they feel cheated--as they usually do, when the other guy gets a better deal than they do.</p> <p>Sellers do their best to work around this issue. The first thing is to never charge more than the base price--it&#39;s fine to offer a student discount, a senior discount, a coupon discount, and a Monday special, but it&#39;s never okay to offer a surcharge for affluent consumers. The next thing is to differentiate the sale--no delivery, no substitutions on today&#39;s special, etc. Historically, they would try to keep the better prices secret, but that never worked very well even before the internet made it easy to compare prices worldwide. (Related to all this is the trick of making it hard to compare prices--many appliances, for example, come in a dozen virtually identical configurations, specifically in order that each store be able to guarantee that you won&#39;t find the &quot;same item&quot; available at a lower price anywhere.)</p> <h2>Variable prices forever</h2> <p>There have always been variable prices, dating back to dawn of money. Even now, shops with fixed prices and no haggling are by no means universal.</p> <p>Any source of information puts pressure on variable prices. If buyers learn that a seller has let an item go for some particular price, they&#39;re likely to hold out for that price, even if they&#39;d otherwise have been willing to pay more. The internet, because it makes providing and finding the information so cheap, makes this all the more powerful.</p> <p>We&#39;ll always have variable prices, but I don&#39;t see any end to the consumer surplus--which is great for consumers.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/variable-prices-and-what-economists-like-about-them">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/gas-is-high-enough">Gas Is High Enough….</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-live-with-inflation">How to live with inflation</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/64-funny-inspiring-and-stupid-money-quotes-from-famous-people">64 Funny, Inspiring and Stupid Money Quotes From Famous People</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-and-worst-places-to-stash-cash-in-your-home">The Best and Worst Places to Stash Cash in Your Home</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/will-work-for-food-the-primal-connection-between-food-and-personal-finance">Will Work For Food: The Primal Connection Between Food and Personal Finance</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance price price negotiation variable prices Tue, 13 Nov 2007 23:13:59 +0000 Philip Brewer 1386 at http://www.wisebread.com Last night I threatened to disconnect my cable http://www.wisebread.com/last-night-i-threatened-to-disconnect-my-cable <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/wisebread_imce/151947_superman_imposter_1.jpg" alt="Super phone" title="Super phone" width="212" height="300" /></p> <p>Sit down, relax, and let me tell you a story. A story about how you get to be a hero, and how to get your cable company begging on all fours like a dog.</p> <p>See, I got my cable bill last night. It was not a shock, or a surprise. I know what I&#39;m paying, and I know I&#39;m paying too much. Way too much. Compared to either Dish Network or DirecTV, Comcast (or your own cable co., they&#39;re all the same) is undoubtedly the most overpriced way to watch TV and get Internet service.</p> <p>After seeing substantially cheaper offers, free equipment and all sorts of additional cool stuff, I had reached my breaking point. Why should I pay almost 50% more for almost exactly the same service? This is not the life of frugality I am preaching.</p> <p>So on behalf of Wisebread (and for my own selfish reasons) I called Comcast. I said right out I wanted to disconnect my service, and was not interested in any offers to make me change my mind. Of course, that&#39;s all I was interested in. I don&#39;t want to go through the hassle of returning equipment, stopping service, and setting up a new account with a new provider. That&#39;s way too much work. I just want more for less.</p> <p>After taking my account details, the customer service rep then went into SAVE SALE mode. You know it, I&#39;m sure. It went something like this.<br /><em><br />CSR: Why do you want to disconnect sir, is it because of the high price? (wow, talk about an admission)</p> <p>ME: Yes.</p> <p>CSR: Getting too much for you? (again, this is way more than I was expecting already)</p> <p>ME: Yes, I can get a much better package somewhere else for what I&#39;m paying now. I&#39;d just like to disconnect please.</p> <p>CSR: I should let you know, as you are a loyal customer I can offer you some very special deals right now.</p> <p>ME: Oh, really? (acting surprised and delighted) What would they be?</p> <p>CSR: Well, for what you&#39;re paying now I can upgrade you to the GOLD package (two movie channels, not one) plus I can hook you up to Comcast Digital Voice with unlimited long distance. That means you get rid of your QWEST phone bill, saving you around $30 a month, and no longer pay for long distance calls.</p> <p>ME: Sounds ok. But these other offers I&#39;m getting offer free DVR.</p> <p>CSR: Let me talk to my supervisor (I am put on hold for 5 seconds)</p> <p>CSR: Yes, we can offer you free DVR equipment. All you would need to do is pay for DVR service. </p> <p>ME: Ummm, if I can get FREE service too, I think that would be something I can go with.</p> <p>CSR: Let me check (I am put on hold again, for 10 seconds)</p> <p>CSR: Yes, we can do that. </p> <p>ME: Is there any charge for installation of any of these services?</p> <p>CSR: Yes, the digital voice is $49.95</p> <p>ME: Ummmm</p> <p>CSR: I can waive that!</p> <p>ME: OK, I&#39;ll do it.</em></p> <p>So, here&#39;s a quick summary. I was on the phone for 10 minutes.</p> <p><strong>Before</strong> I started, I had Comcast Digital Cable Silver (Around $78 a month) and High Speed Internet ($43 a month). I also got my phone through Qwest for another $30 a month, and that had no long distance. <strong>Total = $151 a month.</strong></p> <p><strong>After</strong> my 10-minute call, I had upgraded to Comcast Gold (2 movie channels) plus High Speed Internet, also got my phone service through Comcast (dumping my $30 Qwest phone bill) with free installation, I got long distance free, plus a DVR with DVR service and free installation. <strong>Total = $129 a month.</strong></p> <p>The moral of this story. Ask. It never hurts to call and see if your provider can do something to keep you around. It costs them a lot of money to acquire new customers, it costs a lot less to keep old ones. They will always try something. If they can&#39;t lower your price, they can most likely add services for no extra charge, like the DVR.</p> <p>Now, go forth and call your own providers. And let me know how you get on.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/last-night-i-threatened-to-disconnect-my-cable">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/i-finally-canceled-comcast-cable-before-it-hurt-more-than-my-wallet">I Finally Canceled Comcast Cable…Before It Hurt More Than My Wallet</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/want-free-hbo-or-showtime-just-ask">Want Free HBO or Showtime? Just Ask.</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-get-a-refund-when-something-is-non-refundable">How to Get a Refund When Something Is Non-Refundable</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-will-the-comcastnbc-merger-really-affect-you">How Will The Comcast/NBC Merger Really Affect You?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/lower-your-credit-card-interest-rate-and-reduce-your-phone-bill-immediately-and-easily">Lower Your Credit Card Interest Rate and Reduce Your Phone Bill, Immediately and Easily</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Consumer Affairs better deal better service cable cable bill Comcast customer service haggling price negotiation save money Tue, 10 Apr 2007 16:51:25 +0000 Paul Michael 484 at http://www.wisebread.com