Image by Vanessa Pike-Russell
** This post was written by Nancy Sun, one of the shortlisted applicants for staff writer **
In matters of personal finance there are two ways to positively impact your cash flow: increase your incoming cash or decrease your outgoing expenses.
In previous posts, Lea has highlighted location independence in itself as a means of decreasing your expenses – she pointed out that when you’re location independent you can take advantage of favorable foreign exchange rates and live in countries where the dollar, Euro, pound, etc. can go farther and perhaps even upgrade the standard of living you experience in your mother country.
As a location independent professional, you can additionally decrease your expenses simply by participating in a foreign country’s bargaining / bartering culture. There are many places where prices are not written in stone and it is socially acceptable – even encouraged as a sport – to haggle over an item’s monetary worth.
I encountered this firsthand in the night markets of China, the street markets of Vietnam, the souks of Marrakesh, and even at the summer street fairs in New York City. Through these experiences, I’ve refined my bargaining skills such that I recently confidently bartered down the price of a Persian rug to one-third of what was on its original tag.
Learning how to bargain not only helps shave the costs off food and souvenirs, however. These techniques can also reduce the costs of big-ticket items while abroad, like rent. Lea has previously written about this and emphasised “asking a local what they would expect to pay for the item you want” – this is definitely a fundamental in my negotiation toolkit.
Below are my top tips for getting the best price you can when bargaining & bartering with locals is required…
Market research is vital
This is an expansion of Lea’s ‘ask a local’ philosophy. Ask not only ask one local, but ask many. Ask local citizens, ask the area’s long-term expats and ask other vendors who sell the same product. Just asking locals can sometimes be insufficient because:
- Merchants may assume that locals are on a different, perhaps lower socio-economic tier. Thus, they sell at a price they would never accept from a foreigner.
- You may be buying something that locals never purchase, but would never admit to not affording or having. Thus the number the local quotes is simply a guesstimate of what he/she thinks a foreigner would pay.
Multiple data points can check and balance against each other. Use this information to come up with the your low starting offer and ideal price. You will incorporate these numbers into the methods below.
Buy in bulk
…and remind the merchant you are buying in bulk. Partner up with someone who wants to buy the same item or at least something from the same merchant. After asking the price of just one item, you can follow up with: “And what if I buy two? Or three?” – giving them an opportunity to offer you a deal. You can then start haggling at the ‘deal’ price as his high starting point instead of the original ‘price for one’.
This technique also works when negotiating rent. Is your landlord just multiplying the weekly rate by four to come up with your monthly rate? What if you stay three months instead of one? Is he charging you a high monthly rate just because this month is high tourist season? What about after wards if your stay extends into a slower season – does your rent also decrease correspondingly?
Landlords and property managers often prefer longer term tenants because they don’t have to go through the stress and hassle of gambling with vacancies down the line. Inquire gently to help them conclude that giving you a discount now will save them headache and losing money later.
Never state your price first
This is a classic technique for people who are in the midst of salary negotiations. Applied here, you let the merchant set the tone. While you have a price in mind from your market research above, perhaps this vendor will make you a better deal because he / she needs to offload merchandise or make a quick sale for personal reasons. Give them an opportunity to do so.
If they insist that you name a price, state a broad range (with the low end at or below the lowest price gathered in your market research). Equally important is telling them that this is what someone else told you this item would cost. In case the merchant is offended by the numbers, claiming this is someone else’s range allows you to deflect blame.
Bargaining is often a game about ego and power. Presumptions about how low in price a merchant is willing to sell can come across as an insult and shut down negotiations entirely. Attributing your price to someone else (real or imaginary) diffuses the blow. In fact, the merchant may rebut by educating you on the object of your desire’s true monetary worth. This platform to speak may actually massage the merchant’s ego while giving you a window to continue negotiations.
When stating your price, always start low
This seems obvious, but I’ve seen many foreigners bargain by starting with their ideal price point. After naming your first price in bargaining, there is nowhere to go but up. Merchants will resist capitulating to your exact number often for the sake of ego – or for the eastern concept of ‘saving face.’ To give them room to ‘save face,’ start low, and let them bargain you up to your price threshold.
Know when to walk away
Note that I am not saying ‘Just Walk Away.’ If you’ve already spent a lot of time haggling a price down, walking away will not necessarily get you an ever better deal. Should you return, your item may be gone or your negotiations may start all over. This time, however, the merchant may be less receptive to bargaining.
I, for instance, once made the mistake of ‘walking away’ from a bike I really wanted. When I returned, the merchant said, “that was a one-time offer” and he prioritized helping other customers. He did not want to invest in talking to me a second time due to my track record of not following through on a purchase. Thus, I started off my second effort with a bad rapport and my window of opportunity to get the price down was even more limited.
Applying these techniques most recently helped me negotiate rent on my first location independent apartment. It was 20% lower in cost than what many long-term expats told me I would likely pay as a newcomer to the area.
In sharing these techniques, I hope you can experience greater success in – or at least be less intimidated by – the bargaining experience to be had abroad. Best of luck!
