The art of bargaining

Bargaining in a market may not be a common practice in the United Kingdom but it is common in some of the less developed countries or tourist areas around the world, such as the Xiushui Market in Beijing and the souks in Marrakech.  In those markets, price tags are not shown with the products and you have to ask the shopkeepers for the selling price.   Also, different stalls may sell the same product for totally different amount so you have to browse around different stalls for the prices.  When you ask for the price of a good, the shopkeepers usually quote an amount this is unreasonably high and so, let the negotiation begins.

From my personal experience, a successful negotiator can reduce the original selling price up to 60% and the ‘Door-in-the-face’ technique (Cialdini et al.,1975), is useful  for bargaining.  To start with, know your best alternative to the negotiated agreement (BATNA), which is the absolute highest price you are willing to pay and the alternatives you have.  Brett, Pinkley & Jackofsky (1996) pointed out that negotiators with a BATNA obtain higher individual outcomes than those without.  Next, ask for a big price cut from the original price, preferably an 80% off from the offered price, and get the shopkeeper to say no to the extreme offer.  Then, slowly increase the price to 75% off and 70% of the original price, and the shopkeeper will be more likely to comply with the smaller request.  This is because when the buyer reduce the price by a smaller degree (from 70% off to 60% off), it seems to be a concession the seller, making the seller feel inclined and pressured to respond with a concession on his/her own, thus complying with the smaller request (a smaller reduction in price).  The ‘Door-in-the-face’ technique was first used by Cialdini et al. (1975) that three times as many students agreed to a small request of supervising a group of juvenile delinquents for an afternoon around a zoo after they first rejected to a larger request of supervising the juveniles for 2 hours per week for a period of 2 years. 

If the shopkeeper did not comply with your requests and the price go beyond the highest price you are willing to pay, leave the shop.  You can always find alternatives or even the same product from another shop.  Don’t be afraid to haggle or walk away, you have to be patient in order to get the best deal. 

References: 

Brett, J. F., Pinkley, R. L., & Jackofsky, E. F. (1996). Alternatives to having a BATNA in dyadic negotiation: The influence of goals, self-efficacy, and alternatives on negotiated outcomes. International Journal of Conflict Management, 7, 121-138.

Cialdini, R. B., Vincent, J. E., Lewis, S. K., Catalan, J., Wheeler, D., & Darby, B. L. (1975). Reciprocal concessions procedure for inducing compliance: The door-in-the-face technique. Journal of Personality and Social Psychology, 31, 206-215.         

Wing Shan Jennifer Chan