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How to Negotiate and Lower Your Bills

Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays Bank.


We’ve recently been looking at our expenses to see if we can lower any of our bills. So far, the results have been promising. Earlier this year, we cut our car insurance bill in half. We also noticed that our cable and internet bill went up, so we called our provider. After speaking with customer service, they extended our promotional rate for another year. That 5-10 minute phone call saved us around $150.

A big reason that more people don’t do this sort of thing is that they don’t know where to start, or they think it’s too hard to do. Trust me, it’s a lot easier than you might imagine. The web also has tons of resources to help you with your bills, and by using these along with the RECAP method (outlined below), you can lower your household bills painlessly.

The RECAP method

I’m currently reading Nudge, a book about behavioral economics. In it, the authors talk about “RECAP” as a way to assist consumers handle making complex decisions, such as comparing cell phone usage and looking at plans. It involves the following steps: Record, Evaluate, and Compare Alternative Prices.

What follows is a rundown of how you can use this model to systematically negotiate and optimize your household bills.

Record your current bill and usage for each company

Look at your bills carefully and examine your services and all costs. For example, when looking at your cell phone bill, note how many minutes you get and any other benefits that you might have, like rollover minutes. Be informed of every fee that currently exists with your services.

Evaluate whether or not you’ve optimized your service

Sometimes we pay more for something than we actually use. Keeping with the cell phone example, take a loot at the average number of minutes you’ve used in the past 6 months. Are you close to the limit, or could you move down a tier? Sometimes people buy a plan thinking they’d rather be safe than sorry, but they end up wasting a ton of money.

When I looked at our cable and internet bill, I saw that we’re using all of the services, so I knew we wanted to keep them. Thus, when I called the company, I was only interested in negotiating the price.

Compare Alternative Prices

Take a look around, and write down how much each comparable service’s costs, paying attention to any extra hidden fees that switching may include.

Handling the phone conversations

So you’ve done your due diligence and you’re ready to talk to your current provider. How do you handle the phone call?

Here are a few things you need to keep in mind as you speak with the company on lowering your bill:

Take notes during all of your calls. Keep a notebook or spreadsheet of who you talk to, when you called, and what you agreed to. You may have to go back and reference the call if there is an error with your bill, so be thorough. I’ve had this happen once or twice for cable, but as soon as I mentioned the customer service representative’s name and summarized the conversation, it was quickly resolved in my favor.

Be brief when explaining why you want a discount. Customer service representatives are trained to counter your arguments. Be polite, direct, and calm. Getting emotional will not help, and you might even wind up with negative notes added to your account.

Ask them what can they do to help you. I called our cable and internet company and simply said: “I’m calling because we noticed our bill increased. We’re really tight on money right now, so I wanted to see what you could do to help us.” This puts the ball in their court, and makes it awkward for them to say no. The customer service representative placed us on hold or a minute or so and when she came back, she gave us the discount.

Be ready to actually switch companies. If you’re not getting the service and price that you need, you have to be ready to walk away. Most of the time you’ll be transferred to the cancellation department (sometimes referred to as “retentions”) which usually has more authority to help you.

What not to say

In talking about negotiating with banks, Ramit Sethi had some good points on what not to say:

Avoid questions with one word answers. Instead, ask what else they can do tell help you. Engage them and it will be harder for them to dismiss you.

How much have you saved?

I’ve shared a couple of my personal experiences with lowering our bills. I’m curious to hear your negotiating tips. What does (or doesn’t) work? And how much have you saved by calling companies and negotiating with them?

Posted by on April 28, 2009.

Categories: Frugality

9 Responses

  1. Great post!

    If you want to improve the quality of your life . . . Ask. It never hurts to ask for more or better. Fear of rejection is a dream killer and a roadblock for many people. Their lives would improve dramatically if the only asked for something else.

    by Anonymous on Apr 28, 2009 at 7:32 am

  2. We’ve saved $15 per month on our internet bill. They’re always offering some special for current customers – all I have to do is ask for the special for *new* customers, and they give me the current customers’ special. It’s usually pretty similar.

    Don’t be afraid to upgrade if it costs less – we’re paying $15 less for going from G1 to G5 internet speed. At the end of the 12 month special, we’ll call again and see what specials are available. Worst case scenerio, we simply downgrade to our old, less expensive package!

    by Anonymous on Apr 28, 2009 at 7:39 am

  3. One technique I like to use, as well, is to ask the rep what they would do if they were in your shoes.

    I’ve gotten amazing responses from this. They seem to someone come up with some creative options. I’ve asked a credit card company before, “I’ve gotten a couple 0% offers in the mail… Honestly, what would you do in my situation?” That’s a tough question for someone to be able to answer!

    Great read! I think anyone can benefit from the tips you provide throughout this.

    by Anonymous on Apr 28, 2009 at 7:51 am

  4. We have saved a ton using similar techniques.
    I did an expense audit when we first started getting serious about paying off debt, and again 3 months later. I’m due for another shortly.

    We’re saving $17,000 this year!

    by Anonymous on Apr 28, 2009 at 9:24 am

  5. I haven’t used any of these techniques yet, but “REACH” sounds like a good approach, something I’ll have to evaluate. Thanks for the tips!

    by Anonymous on Apr 28, 2009 at 11:22 am

  6. So, I’ve been reading a lot about doing this lately. After reading this article, I actually went ahead and tried it this morning.

    Took 48 minutes grand total. (no fun!) But I got our internet bill lowered by $25/month. Wow! That’s not a bad hourly rate for work.

    by Anonymous on Apr 28, 2009 at 12:39 pm

  7. Hey I’m impressed with how well you guys are able to cut expenses. Thank you also for sharing your tips. We’re in this together and you better believe I’m trying your suggestions when we shop for a better deal on renter’s insurance.

    I’m on my lunch beak, so my apoogies if my comments seem a bit rushed.

    @Stacey: That’s a great point about upgrade deals. We had that when we first moved in to our apartments and it saved a lot of money.

    @Baker: Never tried that technique with a CSR, so I’ll let you know on Twitter how that goes. 🙂

    @OblivousInvestor That’s fantastic! I’m glad you were able to save some money. You’re right; that’s a pretty good hourly rate. 😀

    by Anonymous on Apr 28, 2009 at 1:17 pm

  8. The RECAP approach sounds like great advice. Consider combining it with BATNA – the best alternative to a negotiated agreement. To create better outcomes from discussions, focus hard on increasing the value of your alternatives to not reaching an agreement. This approach can be applied to situations ranging from credit card interest rate reduction talks with your lender, to discussions on having the terms of your mortgage contract improved, to business relationships.

    by Anonymous on Apr 28, 2009 at 2:05 pm

  9. A very successful tactic I have not heard mentioned is to create & maintain separation between the CSR and the company itself.

    Basically you want to create a distinction between the CSR and the company they work for. This allows you to voice your displeasure with the company, while not attributing any of the displeasure to the person you are dealing with on the phone. For example instead of saying, “You are charging me too much for Internet“, say something like…”I am just really unhappy with how much Comcast is charging me for service, especially with all the other options out there.

    by Anonymous on Apr 29, 2009 at 12:17 am

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Bank Deal: Earn 1.00% APY on an FDIC-insured savings account at Barclays Bank. Hello and welcome. I’m “nickel”, and I’m the guy who runs this place. I’m a thirty-something family man with a loving wife and four wonderful kids. I’ve been sharing my thoughts on various topics related to money and finance here on FiveCentNickel […]more →