If you want to get good at saving yourself a few bucks at a time, you will need to become far more scientific at the process. Assessing the other party's alternatives is just as important as exploring your own. Both of these steps should be very analytical and scientific. Just twenty-five years ago, courses on haggling were rarely taught in management schools. According to Max Bazerman, who's tops in the field, negotiation is one of the most sought-after courses in business schools. Negotiation is the best way to manage those inevitable conflicts in business and life. For simplicity sake, I think of haggling as a sub-discipline of negotiation. Negotiation as a bit more complex and comprises a larger skill base for such things as legal difficulties, contracts, or vendor relationships.
The conventional wisdom is that haggling is a gift. Some have it and some don't. Nahhhh. Haggling like any other competency is learned, not innate. And there's plenty of research showing you can improve those skills with some training or coaching.
In my previous post I talked about exploring your alternatives when you have an opportunity pop up on the radar screen. In this post, I want to flip this discussion from my alternatives to the other party's alternatives.
In the last post I told about making a few bucks off the sale price of Walleye, a fish I really love. I was at the up-scale grocery and saw the fish on sale for $15.99 and decided that it might be a real opportunity for me. Since I buy it when the price isn't sky-high, I knew that it usually sold upwards of $20--say, $17.99 or 18.99. Quickly, I thought through the butcher's BATNA (best alternative to a negotiated sale). What will he do if he can't close a sale with me or other shoppers? There were customers buying fish, but I didn't see anyone buying the fresh Walleye which was stacked pretty high. Furthermore, he'd engaged in a dumb marketing move: he had Atlantic salmon on sale for $7.99 a pound. Why would anyone pay for the Walleye when she could have perfectly good salmon at less than half the price of Walleye. Furthermore, fresh Walleye has short shelf-life. I walked away to do a bit more shopping so I could analyze my butcher's alternatives. The only info lacking was how much Walleye he had to sell. That was easy. I walked back to the butcher and said that it looked like he had an awful lot of Walleye. He fell into my trap and told me that he had a lot.
So how did I analyze my butcher's alternatives? I checked the foot traffic, assessed the amount he had to sell, noted that Salmon was successfully competing with Walleye, and decided that if he couldn't sell it all, he'd have to toss it.
That was my assessment of his alternatives. Evidently they were accurate, and as my previous post revealed, I bought ten pounds of Walleye at $14.85--a figure below his sale price, instead of one pound at $15.99.
Another tidbit: Consumer Reports notes that inventory tags often tell how long an item has been on the shelves. Salespeople will be more willing to haggle if the merchandise has been sitting there for a long time.
Exploring your own alternatives and the other's are the first two steps to successful haggling. It's always easier to learn the skill if you start out with small potatoes. It'll take time to learn it before you'll be ready to negotiate for a new car, house or mortage interest reduction. I suggest you need 10 to 15 successes in ordinary haggling before you move on to the big issues. You need to get used to how the other guy is going to push back on you and how you're going to respond.