Haggling 101: The Science of Bartering

by Alex in South East Asia


As backpackers in South East Asia, one of the first and most important skills we had to learn was how to haggle. Since we're travelling long-term, it's important to us that we're able to stretch our money as thin as possible, so it can carry us as far as it can before we have to stop and (ugh) work again. That's not to say we're haggling pros - on our first day in Bangkok, I agreed to pay 800 Baht for a taxi ride that was only worth 100 at the most. But after 2 months in Asia, visiting markets and buying most of our food from street vendors, I feel like we're able to negotiate a fair price, and it all comes down to a few simple steps.

Step 1: Know how much it's worth 

Before you start haggling, it's important to have an idea of how much you should be paying for things. This goes for any kind of purchase, whether you're buying clothes, jewellery, souvenirs or negotiating a price with a tuk tuk driver. As a general rule, something is probably worth around half of what you're told.

It's also important to do a bit of research before you approach a seller. At a market, you should take a walk around first and see how much other sellers are asking for the same (or similar) item. You won't get told how much something is worth, but you'll get an idea of the average markup. For the price of a tuk tuk ride, you should ask someone ahead of time how much a trip is worth.

Once you've figured out what your dragon incense holder is worth (admit it, you want a dragon incense holder...), you should also decide how much you're willing to pay for it. This will depend on your individual budget, how much you're willing to argue, how badly you want it, and any of a million other factors that are unique to you - but this is your limit. If you can't get this price, you're going to walk away. This will be important later.

If you can't find a dragon, a bracelet or 50 will do just as well.

Step 2: Start low

The first thing you should do is let the seller name their price. They're the shopkeeper, after all. Make the conversation about them selling to you, rather than you buying from them. Don't seem too eager, no matter how badly you want that dragon (really badly, I know!) - it weakens your position and makes the seller think you're likely to pay a higher price. When they tell you how much they want, consider it, but not too intensely. Then name your counter offer.

This can vary a bit from country to country (Vietnamese sellers, for example, tends to mark up items a lot more than Lao ones) and from item to item, but countering at around 50-60% of the asking price is a good rule of thumb. Name your price, and be prepared for your seller to come back at you with some reason why your offer is too low. The goods are excellent quality, they're offering you wholesale prices, they won't be able to feed their kids - anything goes, but don't worry. This is all part of haggling.

The seller will make you a counter-offer, probably to the highest round figure they can. From here, you can start to raise your offer, bit by bit. Be firm and confident, and keep haggling until you and the seller meet somewhere in the middle. If you're happy with that price, great! Enjoy your new dragon incense holder! If not, there's one last gambit you can try...

Step 3: Know when to walk away

It's important to know when you're beaten. Sometimes the seller won't budge any further on price, and it is more than you're willing to pay for your incense holder. When this happens, you have no choice but put the dragon back, shake your head at the seller and turn to leave. Now, pay attention, because you're about to see a magic trick: start to walk away, and watch as the seller's lowest possible price suddenly gets lower!

This is pretty straightforward, really. If you pay less than the seller wants for the incense holder, then they don't make as much money. But if you walk away without it, they don't make any money at all. This should be kept as a last resort, to try and knock that last 20 Baht off and reach a compromise. And 'compromise' is the key word here: The seller probably won't just accept your last offer, but they will offer you a price a lot closer to it. If you're happy with that, great. If not, keep walking. Find someone else with a similar item, or simply let your dreams of an incense-breathing ceramic dragon go.

Step 4: Know when the deal is done

This is an important point that I've seen far too many travellers fail to grasp: Once the price is agreed, that's it. I've seen backpackers reach an agreement, then try and take an extra 10% off the price once their wallet is out. Or finish haggling, pull out their wallets and realise they don't have enough cash to pay for their marijuana-leaf-print tank top.

This is just embarrassing for everyone involved. If they're lucky, the seller will simply laugh (at them), and agree to hold on to the top until they can find an ATM, get the cash out and come back. Sometimes, however, the seller will get upset, and might even charge them a higher price if they do come back.

This rule also applies for non-material goods and services: Agree on the price for a massage, or tuk tuk, or whatever, beforehand. Once the massage is over or you're at your destination, you're bound to pay the agreed-upon price, whatever it may be. This makes perfect sense, if you think about it. If the price was too high or you didn't have enough money, why did you get into the tuk tuk in the first place?

I'm talking about other travellers here, by the way. I know you're way to classy to do this. Just look at your dragon, it's so much nicer than their shirt.

Soap carvings are classy too.

 

PS: Don't be greedy

There's a fine line between not wanting to get ripped off, and being a greedy douchebag. Most markups are fairly steep, and even after bargaining, you're likely to end up paying more than something's worth. That being said, it's important to realise that, particularly if you're coming from a western country, a 10 or 15 Baht difference is a lot less money to you than it is to them. By all means, don't feel guilted into spending more than your budget allows, but refusing to compromise over a few cents is just plain greedy.

And above all else, have fun!!!

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