Negotiating is a fantastic art and it’s something every FIRE follower should learn in order to save money and get better deals. Learning to negotiate can save your tens of thousands of pounds and you’ll have the satisfaction of getting a great deal.
Today I wanted to share the top tips I have to help you get better deals and then some actual strategies you can use:
- Know when to negotiate
The higher value an item the more profit margins tend to exist in that item. Negotiating on a meal out isn’t worthwhile but negotiating on a car absolutely is. All services tend to operate on high profit margins and you should always negotiate rates on annual services like internet, TV and insurance.
- Create an equitable deal
Negotiation isn’t about ripping people off; it’s about getting a good deal. There’s a real difference between negotiating a good price and ripping someone off using shady tactics. Always make sure your offer is based on what something is actually worth to you and what its value is.
- Come prepared
The key to successful negotiation is often to have better data and solid reasoning as to why something is worth what you want to pay. When it comes to negotiaton do as much research as possible – find out the prices elsewhere, check whether any company offers price matching and negotiate deals based on that….if you can find out a trade cost even better – then you know exactly how much profit margin is in the item for the company…and negotiate accordingly.
- Bring Cash
If you’re dealing with a company face to face cash is king. The reason for this is twofold – firstly, the company saves transaction fees from credit card providers – normally around 2%. Secondly, and much less legally, if you pay cash some business owners will put whatever they like down in their books. Im not endorsing this as it isn’t at all legal but it does happen. Cash will often get you a 10% discount.
- Second hand goods
Cash for second hand goods is essential for the reasons above but there also tends to be a lot more wiggle room in second hand goods. Most second hand goods dealers will be buying stock at below 20% of its resale value. This is largely due to the amount of risk in certain second hand goods like furniture, clothing or household items. This means you have a lot more wiggle room when it actually comes to price.
- Never Auto Renew
Auto renewals are the bane of good personal finance…….mainly cause they always put the bloody prices up. When it comes to renewing anything we’ve got a clear strategy 1. Get some competing quotes first 2. Talk to your existing provider and quote the lowest price you’ve got – if they won’t beat it cancel your policy and go with the other provider. If you’re a cheeky master then you can go 1 better than this – quote a price lower than the lowest quote you found; companies never check this and you’ll often find an amazing price jumps out of the woodwork. The company will still be making a horrible profit – but you’ll have the best deal on the block.
- Always start lower
If you want to buy something that’s for sale at £500 and you’re prepared to pay £430 don’t start by offering £430. Start low and work up as you can’t really go backwards in a negotiation. This will largely depend on the item and what it’s actual worth is (remember the research first to understand value so you don’t go so low that you offend or lose the chance of making the deal.
- Never make the first offer
It’s well documented that the person who makes the first offer tends to be at a disadvantage. If you can avoid it never make the first offer – this is why people will say things like “what’s the lowest you’ll take for this” or “can you go any lower on price” – they are hoping that you want a quick deal and will offer below what they actually are prepared to pay. You can use these tactics to get whoever you’re buying from to make the first move. Sometimes you’ll get an I can’t budge on price, sometimes you’ll get a rock bottom offer below what you were prepared to pay anyway.
I’ve made this mistake in business before – pitching a service contract that was instantly accepted, I could of doubled the initial offer without issue and the client would have been happy. Lesson learned!
- Never be in a rush to buy
If you’re in a hurry to buy this makes life much harder for good negotiations and getting good deals. This is where being prepared really helps and if you can pre-plan your buying -whether that’s cars, renewals or furniture the more you plan your buying in advance the easier it will be to find the good deal.
- Always remember the time costs
Time is money as the adage goes. If you spend 5 hours to save yourself £50 you’d probably have been better off spending 5 hours on a business project. 5 hours to save £200 – now we’re talking. But for some people haggling is also fun so where you set your parameters is up to you!
Anyway, hope you have some good haggling fun. I’d really love to hear your best saves from haggling in the comments below.