Save Thousands by Learning to Negotiate

Whether visiting another country or tucked away in the heart of the USA, perfecting the art of negotiation is instrumental in slashing the costs of ones personal financial budget.

Negotiating, bargaining, and haggling are all synonyms that conjure up a variety of feelings. My sister in law hates haggling, and some of you can relate. The idea that you may appear cheap, hurt someone’s feeling or quite frankly, you just don’t know if it’s worth it, are all stereotypes that I want to breakdown.

“People equate negotiating with arguing,” says Roger Fisher, director of the Harvard Negotiation Project and author of Getting to Yes. “But if you view it as a discussion of joint interests, you’ll be more likely to put fair terms on the table and find common ground.”

Too many of you are missing out on thousands of dollars in savings for fear of what others (typically strangers that you’ll never see again) think of you, so we’re going to look at a few principles that I use to help you save money by learning to negotiate.

Realizing that competition for ones dollar is at an all time high, stores and companies want your business. While the tips I share were first written for actual purchases, these negotiating practices can apply for lowering cable bills, internet and cell phone charges, credit card percentages and more.

Your business is important and you can take it elsewhere. You hold the key to saving thousands of dollars with just a tiny bit of effort and these are my top tips for doing so.

Know where to negotiate.

There are so many areas where one can negotiate, but personally, I have found the best places to negotiate are in furniture stores (living in the furniture capital of the world, know that the mark up is astronomical), electronics stores ( TV’s, computers etc), appliance stores ( large ticket items), flea markets, thrift stores, yard sales, and hotel/car rentals (you can always get a lower rate). Our son even negotiated at Walmart (see “point out imperfections.)  I know there are more, but these are the best areas to begin.

Know what you want to spend.

A budget is a budget. If you can’t afford it, don’t buy it, even if it’s a great deal. Set a price that works into your monthly/yearly budget and stick to it. If you decide you can spend $100 on the antique buffet and the seller finally agrees to your terms, don’t try and haggle again. Stick with what you’ve determined because then it’s an honor issue.

Shop around and do your research.

One of the best financial gifts my father gave me as a child was a purchasing prerequisite at Christmas time. He gave me $50 to buy Christmas gifts for my siblings, but he insisted I price shop at three different stores before I could buy the desired item. What a gift he instilled in me by that requirement. My first proud purchase was a dazzling disco ball for my brother. I found out it varied in price by $10. That was a ton of money for a 12 year old girl. Take this same research principle and apply it to your negotiating. Do your research on prices. From buying our washer and dryer at 75% off the original retail price, to purchasing clothes at a yard sale, I know the going price for items and work from there.

Bring cash, but don’t show it all.

Just as Dave Ramsey states, “Cash is king,” quite often this reigns true in the world of negotiations. Yesterday, we negotiated a taxi ride down from $6 to $4.  When we got in the taxi,  the cab driver saw that we had a $5 bill and he got mad at us for wanting to pay only $4 – we gave him the $5. 🙂 For yard sales and flea markets, leave cash in the car. That way when you offer cash, you can honestly say that you only have $xyz amount to pay for that item.  For electronics, ask if there’s a better price if cash is used instead of credit.

Offer less than you want to pay

There will typically be a counter offer, so begin the negotiations lower than what you want to pay. If an article of clothing is marked $1 at a yard sale, I do not offer fifty cents. $1 is fair, but if I gather multiple items at a yard sale, I will politely ask, “Would you take $7 for all this?” (instead of $10). They almost always say yes because my offer was fair as well.

Use silence as your friend.

Last week, my sales man brother was sharing that the first person to talk after an offer has been made is typically the loser. Applying this principle in negotiating everyday life things is affective as well. Let the seller know your final offer and then wait. Don’t feel like you have to fill the space with small talk.

Be willing to walk away without regrets.

Haggling is all about knowing when you need to walk away. This is where my sister in law struggles. She has such a compassionate heart and doesn’t want to hurt anyone’s feelings. Me? I’m compassionate, but I’ll walk away. It’s part of life. I served samples last week at my holiday booth to thousands of people.

Probably only 100 of them bought from me. Did it hurt my feelings? No, I realized that is just part of the cycle of supply and demand. With yard sales, flea markets, and overseas traveling, walking away is part of the process. If I have offered a fair price, waited patiently for a counter offer, but that offer is more than I planned for in my budget, I will walk away. Its value is worth more to them than to me, and I will find it elsewhere for my asking price. Quite often, the person will say, “Ok, I’ll take $xyz,” and the item is mine. But there are many times, when they don’t. This is where the “No regrets” policy comes to play. Sometimes I get caught up in my “yard sale” mentality and I will walk away for a mere few dollars only to really regret it later. Two year later, I still mourn a beautiful desk and some household decor items that I didn’t buy and have yet to find them again for yard sale prices.

Be willing to Compromise

Don’t be so inflexible that you lose the deal over a few dollars (see #7)

Point out imperfections

Shopping is a fact of life. Whether one is a saver or a spender, we are all consumers. There’s nothing I like better when shopping than running across an item that I need which has some minor imperfections. Typically, it would look like that within five minutes of arriving at my house anyhow. Point out the problem and ask politely for a discount on the damaged merchandise. It was a source of much amusement when I realized the parental modeling I had done in this area was definitely observed. My nine year old son (at the time) eyed a Lego set that he had been wanting for a long time. The box was crushed with a small opening and he was so excited because he knew that he could quite possibly save some money. Life Lesson? I had him approach the manager and do all the talking. He learned it never hurts to ask.

Be charming, not cheap

Having observed the cheapest of the cheap and been disgusted, there’s something insulting about overstepping personal boundaries and limits in the art of negotiating. There is a huge difference between being frugal/thrifty and being cheap.  Weeks ago, I found a new bowl at a yard sale still in the packaging. Because it wasn’t a need, but merely a want, I only wanted to pay $2. I asked if they were flexible on the price and they mentioned that they were firm at $4. I told them I completely understood and that it was a beautiful bowl definitely worth $4. I offered my price, they countered and I walked away, but I did it without insulting the seller.

For a larger ticket item such as a washer, dryer set, build a relationship with the seller. Our negotiations took approximately two hours, but the final outcome was a washer for 75% off the retail price at the Sears appliance outlet. By the time our haggling was done, we knew the salesman’s family story and he knew ours. When it was time to buy our oven from Sears, it was an easy process since we had built up this relationship.

Bring your best poker face

Showing hesitation is a good thing.  When I finally found the market location with the scarves, my sweet sister in law shared with the seller how beautiful the items were,  how much she loved them and what a great deal they were. I quickly whispered she wasn’t helping the negotiating process one bit.  When you find that “must have” item, save the happy dance till after the deal is closed. Letting the seller know that you have been looking for that exact same “vase” for five years and sharing how perfectly it matches your great granny’s china set is not a piece of information they need to know. 🙂

JUST HAVE FUN!  Once you understand the art of negotiations, just have fun.

For many vendors, it’s a game, and  putting a few of these steps into practice will help your family save thousands of dollars.