How to Negotiate and Lower Your Bills

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:

• “Are you sure?” Don’t make it easy for the rep to say no.
• “Is there anything else I can do?” Again, imagine if you were a customer service rep and someone said this. It would make your life easier to just say “no.” As a customer, don’t make it easy for companies to say no.
• “Okay.” Don’t give up here. Despite what you learned in sex ed, “No” does not mean “No” when it comes from a bank.

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?