As we all know, inflation has re-emerged in our lives and families are continuing to face real pressure on their household budget with mortgage, power and food prices all increasing faster than incomes. Professor Gary Martin recently reported that haggling is on the rise as a result.
Of course, haggling is a simple form of negotiation where only one thing is negotiated, usually price. It is a classic win-lose transaction where any gain for you is a loss to the retailer.
I’ve been thinking about what a skilled negotiator would do when trying to survive in this commercial jungle. Our suggestion would be to approach your personal transactions with the same skills you would use at work.
The following advice is guaranteed to both save you money and create some fun at the same time:
- Overcome your inhibitions about negotiating; it is not about being aggressive, unpleasant or nervous when negotiating better deals. Practice being cool and professional.
- Don’t be afraid of rejection (this is often a major inhibitor). Be prepared to walk away.
- Have clear objectives before you enter the store and write them down. This is a defense against upselling and impulse purchases.
A quick tale:
A person is asked by their partner to stop off at a supermarket for some garlic and olive oil. They arrive home with olive oil, chocolate, newspaper and magazine but no garlic.
Reason? With no list, they were ‘sucked in’ by the chocolate on special and headlines in the newspaper.
Similarly notice that when you buy a television today, it is very easy to exit the store with not only the tv, but a sound bar (another $1000 thank you very much!), a wall bracket and a special frame to turn the tv into a painting!
Now you have the dilemma of buying suitable furniture for the accessories. A single purchase is now four things, and the outlay has doubled!
- Understand the sellers’ margins. You may be surprised how large and/or small they are. This research will enable you to make realistic offers.
Available data indicates furniture has a markup of 40-60 % while televisions are between 10 and 20%. Margins on food and liquor are much lower. This is where price matching is important because with diligent internet use, you will find some retailer with your favourite whiskey on special and can request a price match. Last week the difference was $40 - a good return for the work.
- Be specific - Professor Martin advises asking for some flexibility in price as a start. A skilled negotiator would ask for a specific discount based on research and the market. For instance, you can say, “I like all these features and the size, but I know I can get all those for $1750 while your price is $2100.” This may end up as a bit of a haggle which is not the preferred method as it is unsophisticated. But what you are doing is anchoring the price point and in doing so you are more likely to achieve a price under $2000.
- Be prepared to ‘bundle’. By adding additional product you are upsizing the sale - but in return request a dollar reduction off both items. “If you do the TV for $1950 I will buy the air fryer for $230.”
- Beware confirmation bias: where having made the deal you are offered extended warranty and valet service membership. You don’t need them!!!
Have some fun! Save money - and hone your skills at the same time.
Happy negotiating!