Friday, November 10, 2023

How to Negotiate Lower Prices

 

Whether you shop in person at “brick and mortar” stores or prefer to shop online, price discrimination is a fact of life. In simple terms, price discrimination is the practice of charging different customers a different price for the same product or service. Think airline seats, hotel rooms, cars, auto insurance, credit card interest rates, cell phone plans, and items sold at garage sales. 


It is common for consumers to pay different prices for these items (e.g., coach seats on the same flight or prices for the same room at the same hotel just like the Trivago television ad). 



In this time of sustained high inflation for many items, price discrimination is particularly concerning. One way to fight back against price discimination is to become a better "haggler." In other words, learn to negotiate the price (downward) on more items that you buy.


Below are some experts tips for haggling:



Ask Better Questions- Questions that require a “yes-no” response (e.g., “Will you lower my interest rate?”) should be avoided because salespeople will likely say “no.” Instead, use phrases that require a conversation. Examples: “What discounts are available?” and “This is more than I want to pay. Tell me what I can do to get a lower price.” You can also negotiate by suggesting a lower amount than the posted price. Example: “I can go $2,500. That’s my limit.”

 

Develop a Script- Negotiation experts recommend preparing a script or list of bullet points to refer to when haggling. Ideally, practice negotiating with a friend or family member to get the timing down right. A negotiation request should be positive and show respect to company staff. The more data available to support the request (e.g., competitor pricing), the better.

 

Cast a Wide Net- Not every item for sale has negotiable prices but many more items do than most people think. As an example, research by Consumer Reports (CR) found that 63% of CR members who haggled for a better price on a mattress succeeded and they saved a median of $258. However, only 22% of the sample of more than $6,000 members tried negotiating for a mattress. Take-away: If you don’t try to request a lower price, you will never get one.

 

Question Questionable Items- If items on a hotel, rental car, or parking lot bill are not fully disclosed or services are not provided, this is a “hook” to question fees and request to have them removed. A common example is hotel resort fees. If they are supposed to cover a pool or fitness center and these facilities are closed, there is a legitimate case to be made to lower your bill.

 

Drop Names- Price discrimination is rampant when affiliation-related discounts are involved. If you have connections that will save you money, speak up. For example, military veterans and service members often receive discounts when shopping and from some cell phone carriers and members of AAA and AARP receive a variety of travel-related and other discounts.

 

In summary, the best antidote for price discrimination is smart negotiation. To learn more about how to haggle effectively, review this article from The Wall Street Journal.


This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.


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