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Learning how to bargain can reap big bucks

89 percent of those who haggled were rewarded at least once

Consumer Reports magazine: August 2013
Illustration: Christoph Hitz

Hate to haggle? You’re not alone. Our new national survey found that just 48 percent of shoppers tried bargaining for a better deal on everyday goods and services in the past three years, down from 61 percent in 2007. But if you’re chicken, you lose. Eighty-nine percent of those who haggled were rewarded at least once. Successful furniture hagglers saved $300 on average, as did those who questioned a health-related charge. Those who challenged their cell-phone plans saved $80.

Clearly, people who don’t know how to bargain or who don't haggle are leaving money on the table. Among the success stories we’ve heard:

  • Karen Wessel, a teacher’s aide from Tuckahoe, N.Y., needed cataract surgery but lacks medical insurance. The receptionist at her optometrist's office, in a wealthy town, gave her an estimate of $10,000 for an ophthalmologist to perform the surgery. But her optometrist also has an office in a small city and suggested an ophthalmologist there. “I explained I had no health insurance, mentioned I understood the surgery would cost around $10,000, and asked if I could get any kind of break,” Wessel says. The doctor agreed to operate at a lower-cost clinic instead of a hospital and accepted $1,000 for his fee. The facility fee was $1,100; anesthesiology, $300. The total: $2,400. “The health insurance field is like a giant house of smoke and mirrors, and you can easily get lost or sidetracked if you do not pay attention,” the relieved patient says. “I have a slightly apologetic demeanor, always have my checkbook in hand, and offer to pay on the spot.”
  • Retired banking executive Ed Detwiler and eight of his Columbus, Ohio, neighbors faced a bill of about $40,000 to have 35 diseased ash trees removed from their properties. The neighbors were acting individually, but Detwiler persuaded them to join forces and let the contractor move heavy equipment across their lawns, making the job easier—and cheaper. That saved the group a total of about $8,000.
  • Angela Harman wanted to upgrade the central air conditioning in her Crestview, Fla., home and thought she’d replace an old furnace at the same time. She had second thoughts about her first-choice A/C unit and wanted to trade up, but the $6,636 price tag didn’t sit well. “I said we’d really like to have the better model but asked if they could come down on the price,” Harman says. The salesman agreed to $6,400, but Harman wasn’t done. “It would be great if you could throw in a new thermostat”—an additional $100—she told him. Harmon got her thermostat, and because of the total system upgrade, the salesman lopped off another $140 as credit for the service contract on the old unit.

13 ways to get to yes

Savvy negotiators know that politeness, friendliness, and a smile are harder to resist than tough talk. “A my-way-or-the-highway approach limits you, because if you then reduce your demands, you run the risk of losing face,” says Steven Cohen, president of Massachusetts-based Negotiation Skills, which teaches corporate clients how to sharpen their bargaining techniques. “Negotiation isn’t a competitive sport.” Here are other tips for smart bargaining:

Assume everything is fair game. Retailers drop prices all the time and call it a sale. “It’s not in the seller’s best interest to charge one price to all customers,” says Stephen Hoch, a marketing professor at the Wharton School of the University of Pennsylvania. “You charge different prices to different people based on their willingness to pay. As long as you sell something for more than your cost, you are making a profit.”

Don’t be intimidated by a title. Hoch says that many people are reluctant to confront doctors or lawyers. But John Santa, M.D., director of the Consumer Reports Health Ratings Center, says that almost everyone in health care—whether physicians, hospitals, labs, or imaging departments—will eventually accept less if you dispute an out-of-pocket charge. That said, he adds, they’ll try to wait you out, make you feel responsible, and drown you in information. Abbie Leibowitz, M.D., co-founder of Health Advocate, which specializes in health care advocacy and assistance, says his company can often cut charges in half for uninsured patients.

Be willing to bargain for big bucks. You can’t win if you don’t try. A 23-year-old college grad (he didn’t want his name used) was accepted into several law schools and was offered generous scholarships by some. As his commitment deadline loomed, two of the schools increased their offers, but his first choice didn’t. He approached the admissions officers of his top pick, told them that another school had upped the ante, and asked for more ($40,000 a year), knowing it would never agree to that amount. The school, which had initially offered $30,000, countered with $33,000, and they sealed the deal.

Give sellers a reason to negotiate. If you’re a loyal customer, say so. If you’re at a mom-and-pop store because you like to shop locally, say that. Tell the car dealer if you intend to bring your vehicle back for servicing. Alice Osner of Denver, Colo., forgot to make a credit-card payment. She contacted customer service to acknowledge the oversight, pointed out her track record of on-time payments, apologized, and asked the rep to waive the $25 penalty plus interest. He did.

Ask open-ended questions. It’s easy to be turned down if you ask a yes-or-no question. Say you want a 60-inch television but can afford only a 52-inch model. Cohen suggests: “I’ve got the perfect space for a 60-inch TV, but the financial issue is a challenge. How can you can help me?”

See whether the seller is anxious. Anxious sellers might include someone who has bought a new house but hasn’t sold the old one or a car dealer with a car that has sat on the lot for months. In cultures where bargaining is common, there’s a price in the morning, when hope springs eternal, and another that kicks in close to closing, when reality sets in.

Decide on a fair price. Research the cost of any product before buying, and use it to determine what you’re willing to pay. Print out or take screen shots of website pages or request written quotes from competitors. Call the store to confirm that it will match the lowest price you’ve found. Ask about a refund of the difference if there’s a drop within a reasonable period of time. If you can’t get a discount, ask about free shipping, delivery, or installation.

Be willing to walk away. When it’s expensive to attract new customers, companies may work hard to retain existing ones. Experience taught Susan Glasspiegel of Simsbury, Conn., that if she didn’t renew her contract with SiriusXM satellite radio, the company would bombard her with offers to return at a lower, albeit temporary, rate. The price of the service was $195 per year, but Glasspiegel had seen promotions for a six-month subscription for $25. When she mentioned those better offers to a Sirius rep, her call was bumped up to several supervisors. Initially, each said that no special deals were available for renewing customers, but she persisted, and the company relented, offering a one-year, $99 contract.

Show your knowledge. If you’re versed in Federal-style furniture, are geeky about gaming systems, or know the ins and outs of foreign coins, share that expertise and curiosity with the seller. You’ll come across as a qualified buyer.

Stay mum. Because it creates awkwardness, silence can be golden. Cohen advises remaining poker-faced after sellers give you their initial proposition. “They’ll wonder if they’ve offended you,” he says. “They’ll think, ‘Maybe what I said didn’t sound appealing,’ and they may repackage the offer into a more attractive one.”

Find flaws. If you see a sweater with a smudge or a dishwasher with a ding, point it out. It’s easier to negotiate with independent stores than with chains, says retail consultant Jack Abelson, and for private-label products than for big brands, because the seller can’t return flawed products to their maker for credit.

Seek a discount for cash. That way, sellers won’t need to pay transaction fees to a credit-card company.

Be discreet. Sellers may not want to make your great deal public.

Why we haggle less

Illustration: Christoph Hitz

Since our 2007 survey, haggling rates have fallen for every product and service category except appliances. The steepest drop involved bank and credit-card fees: Twenty-five percent fewer Americans challenged them than in 2007. There was also a big dive in the number and success rate of those who tried to negotiate for medical charges.

There could be a positive reason for less haggling over financial fees. The Credit Card Act of 2009 put in place sweeping pro-consumer rules, including the requirement that banks give 45 days’ notice of fee changes.

As for the falloff in medical negotiation, Consumer Reports’ associate medical editor, Orly Avitzur, M.D., suggests it might be due in part to the ongoing shift from small medical practices to large ones affiliated with hospitals. “It may have been easier to negotiate with your physician who owned the practice than with someone who is an employee of a large health care system,” Avitzur says. And doctors in large groups often have no authority to negotiate financial issues.

But it’s hard to explain the decrease in haggling for other products and services. After all, the economic downturn should have spawned an army of bargain hunters. Stephen Hoch, a marketing professor at the Wharton School of the University of Pennsylvania, attributes the reluctance in part to fear of embarrassment, looking cheap, or hearing the word no. “It’s like going out on a date,” Hoch says. “Some people just won’t ask out of fear of rejection.”

Steven Cohen, president of Negotiation Skills, bargaining strategy consultants, wonders whether Americans are taking their cue from today’s negative political tone. “People see that negotiating isn’t working among their elected officials in D.C.,” he says. “The polarization of side A vs. side B is such that if side B negotiates with side A, they end up with egg on their face.”

A tightwad tells you how negotiating pays off

I am such a persnickety shopper that I once returned a watermelon that wasn’t sweet enough. No surprise that haggling is part of my daily routine. By mixing moxie and humor with a laid-back style, I seem to win more often than not, even if it’s a minor victory. My guidelines: Nothing is off limits, be polite, and know what constitutes a fair price. Here are some recent wins:

Eyeglasses. My wife and I visited an independent shop and found her a pair of frames for $500, beyond our budget. Doing our best  “good cop, bad cop” routine in front of the salesperson, we lamented that a few cheaper frames weren’t as nice. After about 15 minutes of back and forth, my wife concluded that she wanted the pricey pair. Rather than press the salesperson, we said we wanted time to think and wandered the store so that the salesperson could talk to the owner. When we returned, they offered a 50 percent discount. (Find out how to save on eyeglasses.)

Rental car. To save money, I booked a compact car from Hertz, but the rental wasn’t a bargain: The transmission worked so poorly that I was worried the car would conk out on the interstate. When I returned and a service rep asked how everything went, I responded, “Horribly.” He apologized, but I said that didn’t cut it. The car had been sputtering, I told him, and that made me nervous. Hertz credited me $25 for a partial tank of gas.

Mail-order food. Catalog merchant Harry & David offered a discount based on the amount of an order. I wanted two gift packages at $35 each, $5 off the regular price. But shipping was $19.90. I e-mailed Harry & David, said the fee was a deal breaker, and asked whether the company would waive or reduce it because I was buying two items. It didn’t acknowledge the request but sent a coupon code for 20 percent off my next order.

Insurance. The cost for my combined home and auto insurance kept rising. Aside from decreasing coverage, a bad idea, my agent offered few suggestions to reduce the bill. So I consulted a highly rated competitor, who slashed the premium by $1,100. I presented my current agent with the counterproposal and told her I was ready to walk. The agent suddenly perked up and within 24 hours matched the quote. (Learn how to save on auto and homeowners insurance.)

Perishables. Late in the day, supermarkets may cut the price of foods that have reached their  “sell by” date or that look past their peak. (That doesn’t necessarily mean they’re unsafe or inedible.) At an  A&P, I noticed a $2-off sticker on a bag of rolls that felt hard as rocks. I joked with an employee that the rolls were perfect because I was off to play baseball. When she chuckled, I politely asked whether there was any way I could get a similar discount on the same number of loose, fresher rolls, since it was after 6 p.m. and they were unlikely to be sold. She said yes.

—Tod Marks

Editor's Note: A version of this article appeared in the August 2013 issue of Consumer Reports magazine with the headline "Let’s Make a Deal."
   

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