The Art of Bargaining — strategies, tips, and pitfalls

When you can & can’t bargain:

As a rule of thumb, DON’T expect to bargain at any large stores, corporate chains, or department stores — the employees have neither the authority nor incentive to haggle with you. Also, don’t bother trying in a restaurant (though you might have some luck if you’re with a large group of people in an empty restaurant).

DO bargain when shopping for any goods (clothes, gifts, art, jade, etc) if it looks like an independently owned business. Sometimes these shops will have a sign proclaiming, “All prices are final”…but it’s not always true (unless business is booming, they’d rather make some money than none). But sometimes they really do stick to their guns and won’t budge on price (typically very low-priced goods).

Hotels: Always worth trying to get a lower rate. Depending on their occupancy rate, you can sometimes get discounts even at large, corporate hotel chains (by simply asking or committing to several nights).

“I don’t like to haggle”

"$1,000 huh? Do you take cash?"

You probably know some travelers who simply refuse to haggle and pay whatever price is first offered.

For example, I have a friend who is extremely uncomfortable with haggling because of what I call “First World guilt” (which is somewhat odd to me since she didn’t grow up privileged and her family is from Colombia). Others view it as a form of charitable giving. Or maybe you work for Goldman Sachs and don’t give a shiitake whether you’re paying the inflated foreigner price.

The myth of the rich, clueless Laowai

(thinking): "Oh my Buddha, would you just freakin' decide already!"

Of course, these non-hagglers are perfectly free to spend their money as they please. The problem is that they’re kind of ruining it for the rest of us by perpetuating the myth of the rich, clueless foreigner. For better or worse, many Chinese have a perception of Westerners (especially Americans) as being overly naïve, especially when it comes to haggling (probably mostly due to inexperience).

And with good reason too — the above laowai who willingly pays the first price becomes the stuff of urban myths. After work, I imagine they trade stories about the big fish that they landed (“Dude, you gotta quit the factory! I just made your monthly salary in 2 minutes by selling a fake watch to a laowai! And he didn’t even haggle! A round of pork buns on me!”).

And as far as feeling “guilty” for haggling, my view is that there’s a range of price that will be a win-win for both parties. If a seller ultimately agrees to a price, they’re definitely making a profit. And just by traveling, I’m pumping money into their community by buying stuff, staying at hotels, eating at restaurants, etc…so why should I feel guilty? (also, I prefer to donate my money directly to charities)

Basic bargaining thoughts & tips:

  • Don’t feel embarrassed or guilty for haggling. It’s part of their culture and they fully expect customers — both Chinese and foreign — to drive a hard bargain.

  • Merchants are professional sellers — they’re haggling with tons of customers every day. Bargaining is second-nature for them (unlike for most Westerners). So don’t get too worked up if you still end up paying more than the Chinese price. But if you follow these tips, you’ll at least avoid being a total chump.
  • Don’t let them “anchor” you with their first price. Sellers love to use this psychological anchoring trick by starting with a grossly inflated price in order to fool customers into thinking that they’re getting a deal after some haggling. For example, if their lowest price is Y50, they’ll start with Y200. Then later, you walk away feeling like a haggling stud because you paid Y150.
  • Don’t shop impulsively unless you’re pressed for time and you don’t think you’ll be able to find a similar item. Seems obvious, but always comparison shop and take mental notes to get a sense of how much things cost.
  • Before starting negotiating, have a mental maximum price in mind. Otherwise, it’s too easy to get emotionally attached and invested in the process and end up regretting a purchase.
  • Don’t express too much interest. Even if they can’t understand everything you’re saying, they’re watching your reactions. I always laugh when I see foreigners blowing their negotiating positions from the start. (“Honey look! That stuffed monkey head would be perfect in my den! I must have it!! So…uh…out of curiosity, how much is this anyway?”). Instead, adopt a casual “I could take it or leave it” attitude (“Hmmm…maybe I’ll buy this for my mother…”)
  • Don’t take any of it personally. They’re also viewing it as a business transaction and are emotionally detached. Sometimes they’ll make a big show about pretending to be offended by your counter-offer — don’t feel bad, it’s all part of the game. Hate the game, not the player.

  • Improve your leverage by pointing out any defects or poor workmanship (don’t feel bad, the locals will unabashedly disparage merchandise!). Similarly, don’t be shy about telling them how cheaply another vendor was offering (feel free to stretch the truth).
  • Think outside the box for other points of negotiation if you’re at a point where there’s no more price movement. For example, if you’re buying a bigger item, ask if they’ll throw in some cheaper gift item. Also volume discounts are effective (e.g. pool purchases with a friend).
  • Finally, keep it all in perspective. How much of your time and energy are you investing to save a few bucks? How much do you normally spend at home on just food and drinks? And think of how much more those few bucks might mean to the other person and their family.

Basic Bargaining Process:

Here’s the scenario: You’re interested in buying a Mickey Mao painting and your mental maximum price is Y250. The seller gives you an opening price of Y500 (although unbeknownst to you, his lowest price is Y150).

  • Upon hearing the price of Y500, act shocked and borderline offended (as if you know how that it’s way more than it should be, even if you have no idea). Personally, I like to keep it light and playful and so will express exaggerated jaw-dropping mock horror (and also dropping it like it’s hot!). Three useful words to learn: “tye gway lah“, meaning “too expensive” (rhymes with “buy Layla.”)
  • Don’t be quick to counter-offer — use silence and see if he drops the price first (also gives you a psychological edge). Be reluctant to state any price and keep working his price down. Eventually, offer a much lower price (somewhere around 20-50% of their first price). In this scenario, let’s say you offer Y100. Don’t be quick to counter-offer or assume you’re getting a good deal just because he’s meeting you in the middle. Remember: As soon as you state a price (which might be way too high), your only place to go is UP.
  • Repeat. He’ll either stick to his original price or offer some movement, say Y480. Again, be wary about being anchored to his first price. Just because he’s not offering much movement, doesn’t mean that you’re anywhere near his lowest price.
  • The walk-away: Let’s say after a few rounds, you get him down to Y300. Your final ploy is to pull the old “walk away” technique. You slowly walk away….and he pulls you back and gives his “final price” of Y250. You buy it, patting yourself on the back for “saving” Y250 (or 50% off of his anchored, inflated Y500 opening price).

"I'm going to go out of business if I keep selling my real Nikes for $100!"

Okay, it’s a win-win, right? The problem is — without actually walking away and comparison-shopping — it’s very likely that you overpaid since you have no idea of how low he’d actually go.

In other words, without comparison shopping, he has the advantage because he knows his exact lowest price…and is simply working towards YOUR maximum price.

Advanced bargaining:

Your biggest advantage is TIME. No one is forcing you to make a decision on the spot — you’re free to leave and comparison shop (and he has to risk whether you’ll come back). Also, you always have the option of coming back later and deciding to buy. So avoid the (above) “one-off” bargaining scenarios, especially for higher-ticket items.

Assuming that you can find a similar item elsewhere — and aren’t leaving town immediately — you can often get a better price by actually walking away in order to “test” his walk-away price (i.e. to get a better idea of actual price). In other words, haggle with a few different sellers by literally walking away to get a better sense of the “local price”.

As you walk out, act casual and give him ample opportunity to continue to drop the price (I usually say something like, “Okay, tomorrow, tomorrow!”). But make sure to keep your counteroffer sufficiently low, otherwise it might higher than his lowest price and he might accept it!

"Believe me, you'd pay double for these fake Rolexes in Time Square!"

In the same scenario, let’s say the last price he offered as you walked away was Y180 (much closer to his absolute lowest price of Y150). Now you have a baseline price and a better idea of the fair market rate. Then you can use this information to negotiate more intelligently with seller B (say, by sticking to your guns at Y130). If you have the time, repeat this walk-away process with other sellers. After you’ve gathered a few actual walk-away prices, you can feel confident that you got a good price.

Or let’s say that you can’t find a better price than the initial Y180 price anywhere else. At worst, you can go back to seller A (or most other sellers) later and feel pretty good that you didn’t end up paying the sucker price.

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