It’s official: Price negotiations aren’t just for big-ticket items anymore. The prices of furniture, electronics, wine, jewelry, and other “medium-ticket” goods are now frequently up for discussion. The ancient art of haggling has made a comeback, so brush up on your skills with our six price negotiation tactics.
1. Explore Your Alternatives.
Sometimes a price negotiation emerges on the fly, but in most haggling situations, thorough preparation is advisable.
Suppose your TV breaks. Before marching into the nearest electronics superstore to buy a new one, take time to conduct the same type of research you would if you were in the market for a house or a car. Begin with a thorough consideration of your BATNA, or best alternative to a negotiated agreement—the action you’ll take if your negotiation ends in impasse. In the case of a television, your BATNA might be a low, no-haggle price from an online retailer or it might be to repair your current TV.
Knowing what you will do if you can’t get a good deal will give you bargaining power in your price negotiation. Your BATNA also helps you calculate your reservation price—the highest price you’d be willing to pay in the current negotiation.
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2. Assess Their Alternatives.
Figuring out the other party’s reservation price is the key to knowing how far you can push them in price negotiations—or any business negotiation. Start by considering the other party’s BATNA: What will they do if they can’t close the sale with you?
You may be able to judge how desperate a business is to make a deal by the amount of foot traffic in the store or by researching its financial standing. Generally, the worse business is, the more willing an organization will be to haggle with you—and to give you a price that meets your negotiation goals. Study store policies concerning discounting, returns, and warranties. You can even do your research in the store, as inventory tags often indicate how long an item has been on the shelves. A salesperson may be more willing to engage in a price negotiation over merchandise that has been sitting on the floor a long time.
3. Set the Stage for Success.
Launch your price negotiation early or late in the day, when stores are often quiet, and late in the month, when salespeople may be especially eager to meet quotas. At chain stores, where regular sales staff may not have the power to haggle, you might need to approach a manager. Bring along up-to-date information about competitors’ prices (your BATNA). Be polite and cordial during a price negotiation, and be willing to accept no for an answer. Finally, because stores typically pay fees on credit-card purchases, keep in mind that salespeople may be more willing to bargain if you offer to pay in cash.
4. Make the First Offer.
After you discuss the pros and cons of your desired item, the salesperson might offer to give you a discount without any prompting. If not, open the negotiation yourself: “I can buy this TV online this weekend at a much lower price. Can we work together toward a more competitive deal?”
If the salesperson is willing to engage in a price negotiation, and if you have a strong sense of the ZOPA(zone of possible agreement), you are positioned to make an offer: “Can you beat Amazon.com’s price? I can pay in cash, by the way.” Because you proved you’ve done your homework, he is likely to view your offer as credible, if not entirely reasonable.
5. Insist on Reciprocation.
Next, you enter the dance of concessions that follows each party’s first offer. Throughout the price negotiation, keep your BATNA at the forefront of your mind. Knowing that you have a good alternative if the price negotiation fails will help you stay calm and rational.
Notably, it’s a serious mistake to make an unreciprocated concession in a price negotiation. Savvy hagglers wait out their counterpart’s stalling tactics and insist on receiving a concession in return. If none is forthcoming, thank the salesperson for her time. The mere suggestion that you are about to walk away could inspire her to come up with a counteroffer.
6. Explore Interests Further.
Although price might be the most important issue at stake in your negotiation, you could sweeten the deal for both sides by discussing other issues, such as delivery, financing, and the possibility of repeat business. You can open up such opportunities through direct questioning or by making concessions that you link to specific actions by the other party.
What other advice would you add for getting a great deal in a price negotiation?
P.S. – addendum to previous comment – she is ALWAYS prepared to walk away if the salesperson doesn’t meet her price or at least make a counter-offer. This follows your comment #5, in which she has also been successful at “walking away,” only to have the salesperson come after her and concede on her price offer or at least offer a price concession.
A close friend of mine, and a clever and successful negotiator at retail stores, often finds success when she indicates to the salesperson how much she likes the item and would really “love” to have it, except she just can’t afford (or “justify”) paying the offered price. [She does this selectively and “truthfully,” by the way – saving it for special occasions in which she really does have an “emotional” connection to the item which she can sincerely convey to the salesperson.] I have tried the tactic myself, and it works!
In a store, about to walk away strategy after giving the final offer can be adopted. The sales person wanting not to loose sales will revert or give counter offer if there is any slight possibility also.. Else it is clear that this is the best price the store can offer to take decision.
#5: Insist on reciprocation? Lol! I thought that reciprocation is a natural human reflex/sense of obligation, not something to”insist” upon. That said, overall this article is a good read in that it reminded/replayed a book I read when I was young – “Influence” by Robert Cialdini.