What is the difference between purchasing a carpet in the Grand Bazaar in Istanbul and buying a new car (with trade in) in your local show room? In one sense everything, but in another very little because both require astute, artful, assiduous bargaining skills. It pays to know how to haggle perhaps more so now than ever.
Haggling means to bargain over the price. So who likes haggling? And who hates it? Who feels they can haggle on-line but not face-to-face? What are the rules of, and skills for, haggling? For some people haggling is the core competency of their job. For most of us it is a skill that occasionally comes in useful
For most of us when you go to buy any product it has a clear and specific price. On a daily basis most of what we purchase carriers fixed advertised price. You can try (but will be rather misguided) to negotiate the price of stamps at the post-office, baked beans at the supermarket or novels at airport bookstores.
But have your ever tried chatting up your local bar person, greengrocer or baker? Have you ever dared suggesting to a hotel receptionist that you deserve a discount because it is so late in the day? What about buying things at the farmer’s market or an antique fair?
Most of us are (relatively) comfortable with the idea of the volume discount, the cash discount and the upgrade. BOGOF (Buy One Get One Free) is now very much part of our national psyche and our parents did “discount for cash”. But this is about negotiating around an advertised price. What if there are no guidelines?
Some car showrooms show the shiny new models without those loud numbers alluringly placed on their roofs. ”What would you like to pay for this car?” the young salesman has been encouraged to ask. And your skilful reply? It is not “nothing” or “a couple of hundred” Indeed it is best not to give an answer at all. For the question is a sales trick. “The best price for you and me” and should stop that sort of nonsense.
There is a science – well, social science – and an art to the haggling process. The science is in understanding the process, the art in the theatre of the process.
As economists know very specific factors affect the prices of products. There are robust laws of supply and demand. Prices are also affected by competition. Further macro-economic and socio-political forces can very suddenly change the value of products.
The carpet seller in the bazaar; the salesman on the forecourt; the craftsperson at the fair all have fixed and variable costs. Unless they are in a genuine clearance sale or some equivalent, they usually have a very clear idea of minimum price they are prepared to part with an object to earn a “reasonable living”. This concept is, granted, rather slippery. Anything above the amount is good news.
Most sellers can tell stories of the amazing naïve, careless, or loaded buyer who seems completely price insensitive. They accept the preposterous “first asking price”. So much so that many incredulous sales people wished they had not started even higher. So they have experience of great range. They know there is a bottom, but probably no top. And, like spiders, they wait and watch.
Their task is to size up the customer quickly. They call it “cold reading” in the astrology and tarot card reading business. Look at their age and stage. Get clues of their wealth and taste. Look at jewellery, shoes. Look at what they are carrying or, if you can, the car they arrived in. Where are they coming from? How much do they have? What is their mood state? How interested are they?
Then the product display and explanation. Watch and listen for signs of interest and agreement. Pace it well. Mention the quality, not the price. List the benefits. Flatter their taste. Offer tea and, when and if they seem to have settled on something, start with a “best price” offer.
The rules of bargaining then ensue: Never accept the first offer; make the negotiator happy; ask ‘what if’ question, take you time; generosity is not contagious; shock them with a credible opening move, let you opposite start to haggle, negotiating ia about trading not conceding; ask all those ‘How much off if….”, don’t change the price, change the package, search for packages of potential solutions…etc
The art is in the performance. There are lots of features here that are important. Play the role of the expert, but accommodate to their style, language, etc. Adjust to their mode of speech, display your deep knowledge and love of the product.
The best hagglers are the best negotiators. They seem to know intuitively the Six Principles of Influence (also known as the Six Weapons of Influence) were created by Robert Cialdini. He identified the six principles through experimental studies, and by immersing himself in the world of what he called "compliance professionals" – salespeople, fund raisers, recruiters, advertisers, marketers, and so on.
1. Reciprocity. We all aim to return favors, pay back debts, and treat others as they treat us. This can lead us to feel obliged to offer concessions or discounts to others if they have offered them to us. This is because we're uncomfortable with feeling indebted to them.
2. Commitment (and Consistency) Cialdini says that we have a deep desire to be consistent. For this reason, once we've publically and openly committed to something we're then more inclined to go through with it.
3. Social Proof This principle relies on people's sense of "safety in numbers." We're particularly susceptible to this principle when we're feeling uncertain, and we're more likely to be agree to and follow people we see seem to be similar to us.
4. Liking Cialdini says that we're more likely to be influenced by people we like. Likability comes in many forms – people might be similar or familiar to us, they might give us compliments, or we may just simply trust them.
5. Authority We feel a sense of duty or obligation to people in positions of authority. This is why advertisers of pharmaceutical products employ doctors to front their campaigns, and why most of us will do most things that our manager requests.
6. Scarcity. The principle says that things are more attractive when their availability is limited, or when we stand to lose the opportunity to acquire them on favorable terms.
Most helpfully Cialdini offers help in Resisting Influence. Before accepting a free gift or special offer =, ask yourself whether you're going to feel obliged to give the same or more in return. Beware the feeling of indebtedness?
Before agreeing to a course of action, even at a very preliminary level, think about the consequences of your decision. How easily can you change your mind?
Though everyone else seems to be buying a product or service it may not be right for you. It may be to go against the trend, to be different.
When you feel tempted to buy something consider if you have not “fallen under the spell” of a particularly attractive, charming and likable salesperson. Beware the salesperson who seems similar to you or very lavish with their compliments
Carefully note your reaction to authority figures, experts and those with some sort of power. Are they genuine and does it really matter. Finally beware the closing down sale, the clearance sale and the claim that a product is running out or that a discount deal is soon to expire. Do you really want or need the product now?
Good hagglers know how to resist others. They know, intuitively, the principles of persuasion and how they work. We haggle with our partner, our boss, our children as well as with people who are attempting to influence us and buy from them. It must be one of the most useful life skills that there is!