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October 20, 2009

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You can find a lot of information in negotiation books. One way to strengthen your position is to prepare for the negotiation. Research on what the cost of rings are going for and what type of discounts people are walking away with. Realize that you have the most power in this situation because you can simply walk away at any time and come back at any time. That store is there to make money and must make sales in order to stay in business. There are many tactics they may use to sale you on why the price is correct but if you have the information that will tell them why it is not then they are usually more willing to work with you. I wouldn't give anything away just because someone ask for it. Tell me why you think the price is too high.

I agree with Rob. If you research before buying, you will be able to explain why you want the item at a specific price.

I have never paid full price for a car since I know exactly what I want and am willing to pay before going to a dealership. I also find great loan rates before applying for financing so I will know what they need to beat in order for me to say yes...that's how I got our mortgage for 5.375% in 2007 and our used car loan for 4.1% in 2008.

I have paid full price for furniture that I shouldn't have because I did not look up anything before buying...otherwise I would have known that I could have talked them into another night stand and delivery for free. Lack of experience and knowledge costs you money.

FYI, if you are ever buying something from private vendors, check out what you want and then leave the store/stand. Put what you are willing to pay in your pocket and then go back. Ask the seller if they would be willing to take whatever amount you decided on, reach into your pocket, and pull the money out in your hand. I have always saved between 25-75% using this method and I don't have to haggle as much. The only trick is that you have to be willing to walk away. Otherwise you will haggle with that amount as the starting bid and end up spending more. I was once caught in the street by a vendor who realized I really was only going to pay $40 for a $75 chess set...I walked away when she said no, but she caught up with me to accept the $40. I have successfully used this method at Trader's Village in Houston, New Orleans, Las Vegas, Argentina, and Mexico...usually for sidewalk art and souvenirs.

I am the poster of this comment and while I agree with the above two comments, the posts and comments that have been posted here in the last few months about this have been in the vein of using the "7 most powerful words in the universe" or something like that. :) ..... Namley: "Is that the best you can do?"

That's it. Say those words, get a discount. Story after story of people doing basically that and getting a discount. I have never seen that work. If I spend my time researching and digging up competitive data, going to different stores and finding out that I can save 100 bucks if I work at it, and be willing to spend the time, I believe that can be successful (although not always then either). But Usually I am not interested in doing that. If its a 30K item and I can save 4K then certainly thats different, but I am not interested in doing a bunch of leg work to maybe save 50-100 bucks on a 1K item. I understand some people think thats well worth it and thats great, I don't knock that at all. I just usually don't consider that a good return on my time.

So my question still remains around this idea that places are so eager to do business that if you just ask or imply you might not buy they will throw money at you. I have never had that experience, so my question still remains around if this is generally not true as some anecdotal stories or if its not true for me individually for some reason.

I don't consider myself a great negogiator, but I have bargained on things before. I am just wondering if there are certain mannerisms, certain phrases, certain attitudes, certain looks, etc. that a sales person decides means they don't need to give me a discount. I am sure there is some of that and I try not to display them but people who suck at something usually don't realize it. So I am still trying to determine if I suck at it or if it's just not usually very easy to get a discount.

Apex, We don't know if you're a good haggler or just having bad luck. Have haggled over a car and got the price down? Last car you went to buy what % of full price did you pay? If you're relatively successful at haggling over cars then it would follow that we can assume you're not a bad haggler.

Haggling at retail merchants might be a bit different and take different attitude and tricks. I don't know really, I honestly don't do it myself. My wife does some and she has some success but she generally asks at places that are more likely to haggle like thrift stores or garage sales.

I don't really expect most merchants in the USA to drop their prices simply cause you ask them to. Many merchants don't negotiate at all and others will only drop their price if you give them a good reason to. But asking for a discount can't hurt and worst they can say is 'no'.

Whether or not you're likely to get a discount depends quite a bit on the situation. Is it a big box retail store? Or is it a flea market? Some places you're a lot more likely to get discounts from haggling. I wouldn't expect it at all at the grocery store but the used local book store *might* throw in another book if I'm already buying 10 if I ask. I assume car dealers will haggle. You can usually negotiate a deal if you threaten to leave your cable providor for their competitor.

Your original comments indirectly pointed to one way to find a better deal, which is figure out the time that they are needing to move a product and buy then (eg: at the end of September they're trying to get rid of the September anniversary rings so they don't have to hold onto them for a year). That's how our family buys Christmas items, clothes, electronics, etc.

If the "Is that the best you can do?" doesn't work on the first person, another option is to go up the ranks and ask the same question. The price they are quoting may be the best price that salesperson is authorized to give, but the manager may be able to do better.

Sometimes price is not always the item you can negotiate on, you could see if they will include free cleanings, maintenance, etc.

It helps if the salespeople find you genuine and likeable. Not saying anything about you in particiular - I don't know you at all :) but in order for me to be swayed into giving someone a discount it would help if I find them warm, friendly, and genuine - not looking to pull a fast one on me.

When I've chatted with salespeople I've told them that I like their store, that I want to purchase the item there but it's just too much. I'll ask them if there are any sales coming up soon, or if there's a discount for AAA, for chamber of commerce members, for anything I might be a member of.

I also mention other things I've bought there "I got my mother in law beautiful earrings here and she was so thrilled that now I want to get a ring for my mother" or something like that.

There are times it will work, and times it won't. Lots of practice makes it more comfortable.

I got a free haircut a couple of weeks ago - I schedule haircuts for my kids and me, and then I called back to cancel mine because "I can't swing all of us getting haircuts right now". The stylist cut my hair for free when we went in (it just cost me a nice tip for her). I wasn't looking for that - I just honestly was going to postpone my haircut until I could afford it.

Good luck!

in the case of the ring, or any other big ticket items:

show interest in a MUCH lower priced similar item, along with the more expensive one. Tell the salesperson you like the more expensive one but have reservations on the price and will likely go for the cheaper one. Most salespeople will cut the price some to help ease these reservations, especially those salespeople paid on commission. There commission is slightly lessened by lowering the price, but is still more than what they would have received from the cheaper item.

Our house was a foreclosure and had absolutely no appliances.

When we went to Lowe's, we picked out everything: washer, dryer, fridge, stove/oven, above the stove microwave, and dishwasher. We asked what kind of discount we could get if we bought them all right then. The guys looked us over and said 5% (which would have made it around $2900)...we just thanked them and walked out.

At Conn's, we found everything again (even some of the exact models) and asked again for a discount if we bought it all at once. The Conn's rep said he could get us 15-20% off and went to clear it with his manager. We spent $2300 on everything including taxes and delivery. Plus, we will now always go to Conn's first...win-win.

In short, you might just have to be willing to find a better deal. From all those "magical" statements, I'm the biggest fan of "If we...then how much...". And like Susan said, stay friendly and likeable. Salespeople are much more generous if you aren't rude, whiny, or overly aggressive.

Leave.

That's the best negotiation tool ever. The sales person is afraid of you actually not buying something once you are not in the store. As long as you remain in the store (or act like you are going to buy, which I think this was the case) there is no incentive to give you a discount. Just asking for a discount will get you it sometimes, but you have to be prepared to either not get the discount or leave, if it's that important to you.

Hi Apex,

Susan has great advice. Always be polite and it doesn't hurt if you are charismatic and charming on top of that. Being rude or curt will block you in many cases.

As said by Jim above, you need to have a strategy with dealing with the "fixed price" merchants like stores. This is especially important if you don't want to take the time to get the information of price discovery / shopping around which is your main counter tactic of the fixed price.

The premise of the fixed price is that it plays on equality, all customers are equal and pay the same price so why should you be special?

The first step is you need to find if the store policy / seller has any flexibility in negotiating. Quick way to do this is maybe you look at a few items with some interest and casually toss out if there can be a discount based on buying multiple items. If so then you know they have some room to negotiate. If not then you probably can guess they are restricted by policies.

If they are restricted by policies then all is not lost- you just need to keep politely digging for more information. Such as, are there any planned or unannounced sales coming up, because maybe you need to buy a gift for someone next month... Another one to ask, is there a discount for paying cash or check instead of a credit card? Is there any special extras that are thrown in during such as an extended warranty, service contract, etc. What about if you refer a friend or family member, is there any benefit to you? How about signing up for a store credit card, you may get a voucher. The point is if you are willing to take the time to talk about anything that benefits you within the store policy framework you may come out ahead.

What about their return policy... if you find the item cheaper later could you not return it and then buy it again at the discounted price?

"Is that the best you can do" is a good starting point but you need to do a little more work than that to make it successful. Also just because you do all these things it doesn't work 100% of the time, maybe 30 - 50% of the time it works but over a lifetime that adds up to a HUGE number.

Negotiation is really more of an art than a science in my opinion. You need to keep developing your techniques and style and see what works for you. Clearly what you are doing does not work well, you need to adapt yourself or change up your strategy. If you put some effort and practice you will definitely get better... it should be fun for you otherwise don't do something you hate!

Good luck, and hope to hear you post on a successful negotiation.

-Mike

Hi Apex,

Susan has great advice. Always be polite and it doesn't hurt if you are charismatic and charming on top of that. Being rude or curt will block you in many cases.

As said by Jim above, you need to have a strategy with dealing with the "fixed price" merchants like stores. This is especially important if you don't want to take the time to get the information of price discovery / shopping around which is your main counter tactic of the fixed price.

The premise of the fixed price is that it plays on equality, all customers are equal and pay the same price so why should you be special?

The first step is you need to find if the store policy / seller has any flexibility in negotiating. Quick way to do this is maybe you look at a few items with some interest and casually toss out if there can be a discount based on buying multiple items. If so then you know they have some room to negotiate. If not then you probably can guess they are restricted by policies.

If they are restricted by policies then all is not lost- you just need to keep politely digging for more information. Such as, are there any planned or unannounced sales coming up, because maybe you need to buy a gift for someone next month... Another one to ask, is there a discount for paying cash or check instead of a credit card? Is there any special extras that are thrown in during such as an extended warranty, service contract, etc. What about if you refer a friend or family member, is there any benefit to you? How about signing up for a store credit card, you may get a voucher. The point is if you are willing to take the time to talk about anything that benefits you within the store policy framework you may come out ahead.

What about their return policy... if you find the item cheaper later could you not return it and then buy it again at the discounted price?

"Is that the best you can do" is a good starting point but you need to do a little more work than that to make it successful. Also just because you do all these things it doesn't work 100% of the time, maybe 30 - 50% of the time it works but over a lifetime that adds up to a HUGE number.

Negotiation is really more of an art than a science in my opinion. You need to keep developing your techniques and style and see what works for you. Clearly what you are doing does not work well, you need to adapt yourself or change up your strategy. If you put some effort and practice you will definitely get better... it should be fun for you otherwise don't do something you hate!

Good luck, and hope to hear you post on a successful negotiation.

-Mike

Sorry about the double post! Maybe FMF can delete one of these :-)

One other thing- in negotiation you need to adapt. What works at the present time may not work in the future. Take the phrase "Is this the best you can do?," this may have once worked when very few people asked this question. However, once there are enough mainstream articles and many customers ask this question you can be sure that most sellers will simply respond they way they did to Apex. That's why changing up your strategy and exploring the deal or purchase is pretty important.

Just as when playing poker, all people are constantly adapting to historical behaviors and responses, you need to stay one step ahead!

-Mike

I have been successful in getting a discount in just about every place I ask. I don't ask everywhere though (if you want a laugh, ask a McDonalds employee if they will give you 2 items on the dollar menu for just $1).

I find that getting what you want is highly dependent on HOW YOU ASK!

For jewelry, I would do something like this:

"Hi, "Stephanie!" (using the person's name builds rapport, and lets the salesperson know that You know they are a valuable human being) I'm looking for something for my wife for our anniversary. I really like that sapphire ring, but my budget is $xxxx.xx and you are asking $XXXX.XX. HOW CLOSE can you get to the amount I have budgeted?"

Don't make your question a yes or no answer... NO is an easy answer, if a salesperson has to say more than that, sometimes they will either say something that gives you a hint that they CAN do it for less, or will think of a way they can do it for less on their own - ie - financing, teacher/military/nurse discount.

Also, you have given the person a number, which can be good or bad. If you give them a number, there is NO WAY you will pay less than that, save a small miracle, but if you think the price you are offering is fair, this is okay to do. One old rule of negotiation is that the person who says a number first, loses. Not always true, but it rings true many times.

Ask to speak with the owner. If the owner isn't there, ask when he/she will be in, and come back (and repeat the spiel above!) Leave a business card if you have one - put notes on it - 1 ct Sapphire ring $xxxx.xx - and follow up if you don't hear back in a day.

Another tactic is to bring CASH for the amount that you are willing to pay, and not a cent more. Tell them you have $xxxx.xx for the ring and you'd like to take it home today. Make them figure out how to get it in your hands for that amount after tax.

If they aren't still aren't budging, a way to get 5-10% off net is to ask them to "pay the tax"... Essentially you will pay the sticker price, but they will have to figure out what the selling price is to get the tax+purchase price to match the sticker.

Also, you could try to get them to throw something else you want in for free. A professor I know buys new suits about every year, and usually buys 4-5 at a time, and also tries on shirts and ties at the same time. The zealous salesmen will usually bring over 1-3 ties for each suit. After finding the suits he wants, he tells the salesperson that he will take them IF he throws the ties in for free. He has had a 100% success rate. In this case, maybe a bracelet, earrings, chain? Be creative.

Also, it helps to work with smart people who value relational buyers. "Our" jeweler sees me every time I need jewelry. I bought my wife's engagement ring, wedding ring, my band, earrings, 1st anniversary present, 2nd anniversary present, etc... When I go in, the salesman knows me. He asks me about my wife, I ask him about his grandkids. We chat about my hometown (he was formerly stationed nearby). I tell him what I want to pay for the item and he usually tells me I'm crazy. I ask him what I'm paying for each component of any complex piece, stone, metal, etc. and I inform myself of what the prices are for metals and stones, and I may sure they are reasonable to me before I buy. He may not make retail on the sale, but he knows he's likely to see me again in the future, and this makes him happy!

I have been in the "Big Easy" for a few days, and have successfully asked and received a discount on anything I asked about, including: a t-shirt, food, drinks(buying alcohol for about 10 people), electronics, hotel, and cab fare among others.

Try to get a discount EVERY time you buy something if you need practice. Find out what works and what doesn't. Keep the things that work, ditch those that don't. Repeat until perfect!

Apex second comment was that he didn't want to take the time to do the research to save $100 on a $1000 item. If that's the case, then he should probably plan to not get the discount - leave them for thos eof us who see this as a sport and like to play the game! You can bluff, but usually a few well-chosen facts help a lot more.

I have found that it works much better if you have some specific number in mind. If I prefer to deal with one seller, but another has a lower price, I tell him that directly and show the competitor price. This has worked for cars, mortgage closing costs, houses, etc.

If you have a budget (or pretend to), that's nore difficult. Most people have too much pride to say "I cannot afford ...".

Also, you have to be ready to walk. My wife and I bought a used car from a dealer, who supposedly couldn't drop the price. Funny how when I had my jacket on and was halfway out the door, he found a way to accomodate me.

Thanks to everyone for their comments. They were helpful. I think it tells me a few things.

1. It's rarely as easy as just asking as I suspected.

2. Some people are just going to be better at it than others. As well as some people being much more experienced and better informed about the whole process and are likely to do much better. This is not surprising as experience and natural talent always gives someone an advantage. I have always felt that people are born sales people much more so than they can be taught to be sales people and that experience just improves their natural skills. That may be less true in negotiation than in sales but I do think there is certainly an element of negotiation that lends itself to natural ability. Afterall, you are typically negotiating with sales people.

3. Some places are just going be much less likely to give any meaningful discounts.

4. But I think there are some different tactics, approaches, and styles I could use that could improve my odds, and I appreciate all the suggestions along those lines.

Thanks for sharing your experiences and techniques.

@Mike Hunt,

I wanted to follow up on your comment because you said something at the very end that was a bit of an epiphany for me and I think it helps me to be mostly ok with how this works out for me.

You said: "it should be fun for you otherwise don't do something you hate!"

I very much do hate haggling over price. If I knew I absolutely had to go into the store and haggle over price it could make me not even go in. I might prefer a root canal to haggling. This is why I will do it on the very large ticket items but prefer to avoid it on the low ticket items.

I believe this is a good portion of why I "somewhat suck" at this and why it would be a long journey for me to ever be really good at it. It's hard to be good at something you so strongly hate to do.

Putting that together with all the other comments here I think for my success and my sanity I need to focus on discounts at merchants and for items where discounts are more likely available. The rest is not worth the icky feeling I get even having to approach the topic. And I am fine with that. I have never been one to try to get the best deal possible when dealing with people. I just want a fair deal.

I actually don't want to put the screws to someone, merchant or otherwise, to squeeze him down to has lowest possible margin. I know some people find great pleasure in that as it becomes a contest. That's just not something I enjoy or even feel good about doing (and I don't have a problem with people who do it, after all the merchant doesn't have to agree). But what I really don't want to be is the only rube who pays sticker when most people aren't. That will make me visibly upset. I would never pay anywhere close to sticker on a new car for instance. So it probably really comes down to my sense of fairness and equitable price distribution. I am fine being in the 50% range for prices paid. I make a good living and live fairly frugal so I am way ahead of most people anyway. I don't need to be in the bottom 10% of prices paid, but I certainly don't want to be in the top 10% of prices paid either. And I don't think I am. I just am not going to be the guy who is talking about the amazing deal he got and that's ok, unless everyone is getting that deal but me. :)

One comment about "doing something you hate", and feeling "icky": It is a uniquely American, and to a lesser extent, northern European concept to NOT haggle.

In Asia, Africa, the Middle East and some parts of Europe it is a normal part of doing business.

Personally I think it is inefficient - why do both buyer and seller spend hours to get to the price-point they both knew they were going to get to anyway?

And all the talking about amazing deals is sometimes just that - all talk. Just like the people who boast about their amazing stock market performance, but forget to mention the other 90% of the time when they lost money.

@Mark,

I agree with both points. Playing the game is wasteful and annoying. And since you bring it up I think the reason it is more prevelent elsewhere probably has something to do with immature and inefficient markets. A mature and efficient market should have enough transparency and liquidity in the system to quickly settle at a price that is in the ball park of market value. The whole idea of haggling just means the price is not market price but an arbitrary price and there is no idea of where the real market price is. Not to get on a tangent here but market price is not the same as intrinsic value. I am not a believer in the efficient market hypothesis and just because something is selling for X does not in my view mean it is worth anywhere near X as evidence by the stock market crashes in the last decade. But the point is not what it is worth but what it is selling for. And even if it is worth less, as the seller if there are buyers willing to pay X there is no reason I should be willing to let you convince me to sell it for less than X. If I do let you convince me to sell it for less than X then clearly I know the market is not X and I will have a hard time getting X from other people. And that is the whole point. Bargaining occurs because things are not priced at market.

And I do agree that people only talk about how well they did on things and even then they tend to exaggerate or may even think they got a great deal on something but don't realize they just got a reduction on a vastly over-priced or marked up item, which goes back to the immature or illiquid market again.

For instance. I did my an internet based marketing business with a partner a number of years back. We had a website and were selling advertising on it. I worked on the technical and strategy side of the business as I am not a sales based person. We were having trouble cash flowing the business at first. We brought in a sales person who had been doing similiar stuff else where (the guy was a bit slimey if you ask me but that was my partner's doing). But anyway, he immediately told us our problem was we were charging way too little. So he gets on the phone and his solution was simple. On his own he just quadrupled the price and then immediately offered a 50% discount. Sometimes even giving 60% or more discount. Prices paid had doubled overnight but people were getting huge discounts and sales went way up.

If you are getting discounts like that, you are getting conned because any business that can afford to give you a discount like that has a price pulled out of their rear end, just like this sales person did that worked for us.

So yes, I am getting less concerned about the supposed great deals I am missing.

Apex,

The reason you won't do well in negotiations is because you find it so distasteful. Until you have an attitude change (not that you need to by the way) then you won't be successful at negotiation because you won't enjoy it.

Know this- Negotiation is the give and take of human aspirations. It is the same ideal at work whether trying to get a better deal on a fixed price or deciding with your spouse who will cook dinner tonight. At the heart of negotiation is the principle of fairness- nobody likes to feel ripped off, on either side of the table. Successful negotiators keep that in mind. The worst thing a negotiator could do is force the other party to accept their terms and then brag to the world about it. For sure the other party would feel strong resentment and may seek revenge or at the very least never want to deal with the other person again. Not a win-win by any means.

I took a negotiation class (Karrass negotiation - the same one that advertises in the airline magazines) and I can say it was excellent. The key things I learned in the class are the following:

1. Those who ask for more generally get more.

2. The satisfaction of the outcome of the negotiation is not dependent on the result of the negotiation (i.e. who got what) but the fact that the parties could agree in the end. In fact the longer it took to reach the agreement the happier both parties were in the end.

In my mind, that made me comfortable with the concept of negotiating. If you think that you are ripping someone off or whatever you will never enjoy this. Actually that's not true but if you feel it, it becomes reality for you.

Remember the concept of a fixed price is a negotiation strategy in itself. Go ahead and pay for the fixed price- 99% of the people do. Or shop on the internet, no negotiation necessary, just need to shop around. Either make it fun for yourself or don't do it. For the big purchases bring someone else along to do the job for you.

If you do ever internalize that how people feel is a result of how you treat them then you will not feel cheap about negotiation. In fact the mark of a successful negotiatior is that everyone goes away more happy with the deal and somehow everybody comes out ahead. It sounds very idealistic but it's been true for me in countless examples- and I don't even consider myself to be an super negotiator.

Mike

Timing plays a huge part as well. You asked for a discount on an item that was 'hot'. You might find you have different luck in July on a September birthstone. You gave away some of your negotiating position by waiting. Its not like you could wait until the price came down.

Apex,

Regarding efficient market hypothesis, consider this:

Many companies try to diffrentiate their pricing to ensure that customers will pay as high as they wish so manufacturers & retailers can maximize their profit. This is efficient as a company can maximize revenue & profit together. Negotiation is a way to get more information on price discovery and how much a buyer & seller is willing to move to agree on a price... it's the same process that happens in liquid markets, like a stock exchange. Now that is efficient.

Going to the store and paying one price is quite inefficient actually.

-Mike

@Mike,

I don't feel cheap negotiating. I don't feel like I am ripping them off negotiating. I think its more of the uncomfortableness of having to bring it up and the feeling I get when they say no and having to keep pushing to see if there is a yes somewhere down the line and the effort involved in doing all that and its a bit draining in the end. I am not wired for sales and I think this is similiar. Now again, on important big ticket items I will go to the mat if I have to because then its well worth the effort but all those negatives just aren't worth it for me on the small items and I think its not always that successful anyway. Thats what I learned about myself and the process from reading the posts here including yours especially.

As to EMH: I don't see how the stock exchange is like a negotiation. Prices are constantly changing based purely on supply demand in the stock market. There is no negotiation. When you go to sell your stock no one contacts you and asks you if you will take less. If you put in a limit order your order sits there until someone is willing to pay it or until you realize you can't get that price and change it. You get what people are willing to pay.

A comparable would be for a store to constantly be changing its price based on the last price someone was willing to pay. Price discovery happens by figuring out what price the masses are willing to pay. But price discovery does not happen when one person is willing to pay $10 and 1 person is only willing to pay $5 and both people are allowed to purchase the same item for their respective prices. This can only happen in an inefficient market where the seller is able to get by selling the item to some people for way over the true market price which would never happen in a stock market (no one pays $10 for a $5 stock) The other person doesn't discover what prices are being paid by others so its not reflecting any kind of market based price discovery. But with large liquid markets with good competition price discovery just happens. Because if Target sells it for $3 and Walmart sells it for $2 then I go to Walmart and eventually Target has to lower their price or realize they can't compete on that product with Walmart. Mature markets with ample competitors and without supply demand disruptions, should settle in at market prices and the room for negotiation should not even exist.

It's really a simple matter for finding the point where the supply demand curves cross. Clearly there are always some people who will pay more than market price and some who would only pay less at any give supply demand combination. But efficient markets find the point where supply and demand meet and everyone pays that price. Show me where negotiation effects price on the supply demand chart? It doesn't. Negotiation can only work when the price is not based on the market based supply demand fundamentals.

A perfect example is the retail gasoline market. Gas stations make very little margin on the gas they sell at the pump. The stations are ubiquitous and stations in the same proximity all charge basically the same price or quickly reset to the same price. Try negotiating with the gas station on the pump price. You won't have any luck because the price is the best available market price and there is no room to negoiate.

That is what mature markets should do and if you can negotiate then its not really operating like a truly price transparent efficient market. This only works in widget markets obviously. Houses does not work because every house is different and in a different location. But this should work even for cars. A Chevy Malibu with all the options is the same car no matter where you buy it. Negotiation should not happen there, but it does. Thus that market is not efficiently setting price.

The only time I've had good luck negotiating on smaller things (not cars or house) is when they were on clearance. If something's on clearance, odds are you can get it for less than the price on the tag, especially if the item is taking up a large space.

I got a decent deal on a clearance mower at Lowes, about 25% off the marked price. I also got about 10% off the clearance price of a clearance microwave at a appliance store in town. My mom got a great deal on a garage cabinet at sears that had a dent in the door. It was a clearance item, and she told them it was assembled incorrectly and would have to be disassembled to fix it. The reality was the unit was sitting upside down and the doors were on upside down.

Sometimes it's just a matter of being at the right place at the right time. I hear of people getting smoking deals on power tools that have been clearance (without having to ask for further discount).

And of course, anything used (or returned/damaged) has a negotiable price. That's what you need to look for. But at that point, you need to know a lot about the item to tell if it's still in serviceable condition.

And there will be many times that they simply won't budge on the price.

Apex,

Now that I think more about it you may be right. Negotiation usually is more extreme when one or both parties has limited information. So maybe that leads to an inefficient market.

I do know this, heard that Amazon.com had non standard pricing based on customer profiling, so they were charging some people $9 for the same book others were paying $6 for... it worked brilliantly for a while until it got reported and people complained big time. I guess this is because of the underlying principle of fairness (everybody should pay the same price) was violated...?

When you look at the stock market the asks will always move based on the bids, so that looks like negotiation to me. True you can place a limit order and it will get filled or not based on if the market swings through your limit but if you are on the trading floor the bids and asks move just haggling at a fish market. All negotiation strategies apply in the market, that's why hedge funds can go naked short big time and put out a rumor to try and sink a small cap stock. In that sense the stock market doesn't seem to have all players having full information.

-Mike

@Mike,

I think you are correct about the asks moving in response to the bids (although when the market is going the other direction you may find the bids moving in response to the asks). This may have a bit of negotiation to it but I would submit that any negotiation component that is going on is really just a small amount of price discovery around the margins in response to a slightly shifting supply or demand curve. That's what makes the stock market an interesting study in economics. Price is rediscovered every second in response to minute shifts in either the supply or demand curve (or sometimes large shifts based on new information).

Any negotiation component that is happening has a few characteristics though that I think separate it from typical negotiation.

1. The negotiation is on the order of 1/10th or 1/100th of a percent. We are talking about real time sub-second shifts in the price of a $100 liquid stock of a few pennies.
2. The negotiation is only entered into by a few floor traders on the big board or perhaps the market makers on the electronic exchanges although in very liquid stocks the market maker is not playing a very critical role if any at all. But the negotiation is not done by the millions of external market participants
3. And because the negotiation if it occurs is handled by the small number of players who make the market liquid and is happening at fractions of a percent of the price, I as a participant can reap the benefit of having an optimally negotiated price (whether I am the buyer or the seller) without doing any negotiation, because the market is discovering price for me.

Now that may not mean that the price I pay/get is a good price or an accurate valuation, but it is the price that everyone else is paying/getting and willing to pay/accept at that time. I don't have to wonder if I am getting a good deal. The price is the fair and going market price for the item.

Of course very few things are ever going to be able to offer the efficiency and price discovery of the stock market, and thats why negotiation does occur.

I have enjoyed this discussion on negotiation immensely though, and thank you very much for your perspective.

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