Read more Oily Rag articles by Frank and Muriel Newman
It’s great to see retailers are catching on to the oily rag way of doing things by being prepared to haggle over price. A major daily ran a story recently about how a mystery shopper was able to negotiate the price of a wide screen TV down from $2198 to $1750 by comparing store prices and having a good haggle. The truth is the retail price on big ticket items is always negotiable, but you need to ask.
Most people don’t feel very comfortable about haggling, but you should not feel shy about doing it. It’s a free country, and as a famous economist once said (paraphrased into our own wording), “If they don’t wanna do it, they won’t.” In other words, in a free market someone will only accept your offer if it’s in their interests to do so.
The thing about negotiation is that because most people don’t like it, they don’t bother doing it – or if they do, they try to get it over and done with as quickly as possible. The trick is to know how much you can buy something for elsewhere, know what your maximum price is, and be polite. Ask how much they would accept for cash. Or say you like the product but ask if they could sharpen their pencil on the price. Or ask them for their best price – if you were to make a decision about this today? Or simply tell them the price their competitor is selling the product for and ask them if they could better it.
If you get to a point where you can’t agree on price, start working on other issues. Try negotiating payment terms, or the inclusion of some extras that you would otherwise have to pay for in cash.
For example let’s assume you buy a second-hand stove from a used appliance store. The asking price is $400. You offer $350, but the lowest the dealer will go is $375. You say that this is more than you would like to pay, but you will agree to it – if the dealer will offer a two-year guarantee on the appliance instead of the usual six months. You settle on an 18-month guarantee. The result of the negotiation is that you have saved $25 and you have an additional eighteen months of guarantee. By getting involved in a bit of good old haggling you have gained something for nothing – and getting something for nothing is what those living off the smell of an oily rag like to do!
If you are dealing with someone who does not have any authority to negotiate on price ask if the manager is available to chat about the price.
Haggling is well worth doing and all of those savings put significant money into your pocket. Let’s assume that over the next 40 years you spend $400,000 buying things – that’s $10,000 a year buying big-ticket items. Now let’s assume you are able to haggle 10% of the price from everything you buy. At the end of the 40 years you will be $40,000 better off simply because you haggled – and that’s ignoring the compounding interest you would earn on that money!
Most sellers will give you a 10% discount without a second thought. Some people think haggling is a “shrink” – but if it’s done right it can be a lot of fun. That’s what living off the smell of an oily rag is all about!
* Frank and Muriel Newman are the authors of Living off the Smell of an Oily Rag in NZ. Readers can submit their oily rag tips on-line at www.oilyrag.co.nz. The book is available from bookstores and online at www.oilyrag.co.nz.