I’m not a big fan of haggling. I rarely do it. I’d much rather walk into a transaction knowing the price and making a calm decision based on that price.
Plus, being a small business owner, I understand the value of margins and am happy to pay the list price when I can afford it, or to put off my purchase if I can’t.
But like it or not, sometimes haggling is called for. As I see it, haggling situations fall into three categories: haggling this is expected, haggling that is unexpected but appropriate, and haggling that is absolutely necessary. Below is an explanation of each category, and a couple of tips for each.
The first time I haggled for anything was when I was in the service and on a short deployment to an Air Force base in Tucson, Arizona, which is not far from the border with Mexico. A buddy of mine had been to the border town of Nogales, and persuaded me to drive to the market there on a day off. On the way he explained that all the vendors expected to be haggled. I was uncomfortable with the concept – in my experience, the price on the label is the price you pay.
But when we got there I quickly realized that my friend was right. When I asked a vendor the price of a nice onyx chess set, he quoted me $25 or so, which was out of my budget for the item. He saw my frown and suddenly the price became $15! I suggested $10 and he accepted.
So there are some instances where haggling is called for and everyone expects it. You realize this if you’ve ever bought a used car – except in places like CarMax, which have a set price, most car dealers expect you to haggle. And haggling often happens in other marketplaces – thrift stores, garage sales, flea markets, etc.
Here are two tips for haggling when it is expected of you:
- Don’t be shy. The shop owner knows you are going to haggle and won’t be offended.
- Be honest and fair. Is that kitchen table at the flea market worth $25 to you but priced at $30? Then don’t offer $5 for it – you’re just playing games. Instead make a fair offer that gives the seller some room to bargain – say $20. If he splits the difference with you you’ll get the table for a good price and he’ll get what he probably expected for it.
Unexpected but appropriate haggling
When I was in college I once went to a shoe store to buy running shoes. I tried on several pairs, made my choice, and returned to campus. Later that day I returned from a run, unlaced my shoes, and realized that I had accidentally purchased one shoe each from two different pairs!
I called the store and explained. The clerk opened the other box and confirmed that it contained two shoes from two different pairs. I realized I had unusual leverage in this situation, and I offered to buy that mismatched pair for some amount less than the list price for either pair.
The clerk was surprised, and rejected my offer, assuming that I would return to the store and exchange one of my mismatched shoes for the appropriate other shoe. But I had already run in my mismatched shoes, and I knew the store would not want to sell a pair with one used shoe. I explained this, the clerk conferred with someone else at the store, and accepted my offer.
This is an example of an unexpected, but appropriate, time to haggle. In later years I felt slightly guilty about this particular haggle, because a small shoe store doesn’t have much room for bargaining. But in the end they sold two pairs of shoes to me, even if one was at a discount, so we both got something out of the deal.
Here is a tip for succeeding at this type of haggling:
Look for an opportunity when you value something more than the shop owner does, and make a fair offer. I read about a woman who noticed a bunch of dusty party decorations on a top shelf in a grocery store. She found the manager and offered him half price for the whole lot (she evidently had a big party coming up).
The manager ultimately accepted, because he realized selling the old inventory would put cash into the register and clear up space for more saleable merchandise.
Good business people realize that time is money. Another thing they realize is that lawyer’s fees eat up money rapidly. Those two elements together mean that sometimes businesses that are owed money are willing to accept less than the full amount in order to settle a debt.
Twice I have been indirectly involved with businesses that were unable to pay their obligations. Bankruptcy is a common way out of that situation, but in these two cases the owners instead went to their creditors with honest explanations of the situations and made fair offers to settle the debt.
In both cases those offers were accepted and, consequently, the businesses stayed out of bankruptcy. The debtors accepted the offers because they knew it was better to take some money now than risk getting mired in a bankruptcy bankruptcy case later.
Here are two tips for this situation:
- Be honest about your inability to pay. If you are lying, the truth may be revealed and you will lose a great deal of credibility and almost certainly face a lawsuit.
- Don’t do this unless you are in truly dire straits. There is a cost to settling debt – possibly damaged credit, probably damaged vendor relations, and almost certainly a damaged psyche for venturing into “deadbeat” territory. So only do this if the alternative is bankruptcy, which is a lose-lose situation in many cases.
Haggling can pay off, in the right circumstances and if done correctly. The key thing is to remember that a truly successful negotiation means each party “wins” something in the exchange.