Bartering: The Importance of Being Earnest
Every time I tell people about the excellent deals I bartered for during my trip to Central America I’m met with guilty excuses about people’s meek bartering skills. For some reason many of my friends and family think that bartering is an unconscionable crime. This is especially true of my friends here in Canada, where bartering isn’t prevalent because big box stores don’t usually allow it. In my opinion, there is nothing to be lost by bartering and everything to be gained. The article here at eHow.com is an excellent place to get started growing your bartering skills, but is impassionate and inhumane approach to bartering.
Hit the read more link to see a few of my personal tips and guidelines to barter earnestly.
I want to tell you why you need to barter in countries like Mexico. While products and goods have a certain value, vendors expecting to barter tend to have a higher initial price to try to sell their goods for a larger profit. By having a large initial price, vendors are doing something very tricky: calling upon an Anchoring Bias. An anchoring bias is the tendency that most humans have to base their initial valuation of a product on the first price they see. As an example, if the asking price for an object is $20, so offers tend to be clustered below, but close to the $20 price mark. The same item initially priced at $30 will make offers cluster closer to $30. Vendors know this, and set high initial prices so that your initial evaluation of the product is high as well. Before you look at an item’s price make an earnest estimate of a product’s value before you see the price.
The eHow article says to offer 1/2 of the listed price for your first offer, but don’t be ashamed to offer less if you feel the product is less valuable or your estimate of the value is low. I found 1/3 of the listed price to be a good starting point and offering one third the difference between your last offer and the vendor’s counter offer, with the intention of converging around the 1/2 price mark. (Math geeks: N[Sum[3^(-n), {n, 1, Infinity}]] converges to 1/2.)
Always be prepared to pay what you offer. If you and the seller agree on a price, the worst thing you can do is renege on the deal. To avoid this, only carry what you are willing to pay into a sale. You can do this by going to the shop and examining the product, then privately moving only the amount of money you are willing to pay into your wallet or purse. This is also a devious but effective method of driving down the price, since you can show the vendor how much money you “have”, thereby nullifying any attempts to make larger counter offers. As a less devious alternative, I wrote a budget for my final day in Playa del Carmen and used the amount of money I budgeted for gifts as a bartering tool.
Finally, and in addition to step 4 in the eHow article above, always be prepared to walk away from a purchase. Don’t just turn and walk away from the seller. If the price is still too high for your preference, thank the seller for his time earnestly, then move along. The seller will usually make a last-ditch attempt to sell the item at your last offer price. If this is the case, thank them, make the purchase and move along.
That’s all I’ve got for now. I will be spending a few weeks on the island of Cozumel in the near future, and I intend to explore the intricacies of bartering for services (specifically massages and haircuts). I’ll update you on my successes (or failures)!