As featured in The Wall Street Journal, Money Magazine, and more!

Posts tagged as:

negotiation

Tom Dziubek, the producer of the Consumerism Commentary Podcast, and I have been having some difficulties with the Acer Aspire desktop I purchased earlier this year. I believe the problem can be fixed, but it will take some time. The problems have unfortunately affected our recording and interview schedule, so when an interview on Friday was cut short due to yet another glitch and more interviews were scheduled for today that were already postponed due to technical difficulties, I wanted to resolve the problem this weekend.

At this moment, it is somewhat difficult to get a powerful desktop computer on short notice. Retail stores are gearing up for the release of Windows 7 and manufacturers aren’t providing the stores with much. The belief here is that consumers would rather wait for Windows 7 to be installed at the factory rather than buy a computer whose operating system will be out of date within weeks, even if it includes a free upgrade.

I spotted one major regional chain electronics store that not only had something better than eMachines, it had the exact desktop model that I probably would have purchased online, with a few modifications, if I had more time. Most of the computer’s specifications were excellent, but the only drawbacks were a 5400 rpm hard drive — too slow for audio recording — and an integrated graphics chip. The graphics chip was probably fine for what we needed but I prefer discrete graphics.

The salesperson and I spoke for a long time, and I eventually got a discount on the purchase — a larger discount than I asked for. Here is how I won this battle of money.

1. I was very knowledgeable about what I wanted. I have been researching the best desktops currently on the model for the past few weeks, ever since the first sign of problems with the Acer Aspire, even though I believed and still believe the problem can be fixed. I knew exactly what I wanted and the price range I wanted to pay for the features I wanted.

The salesperson knew I was knowledgeable because I discussed the system in detail with him and explained my other options. I could tell he wasn’t as technically inclined as I am so I didn’t try to show off; I kept the conversation on his level but I was able to express that I had done my research.

2. I pointed out the flaws. It is true this machine had the two drawbacks I mentioned above. I made sure the salesperson was aware of my observation that these factors were detrimental to my choice and might hold me back from buying.

3. I asked for a discount. On the basis of the machine not matching my expectations exactly, and knowing that a 10% discount is common in retail electronics, I asked for 15% off. The salesperson explained that they cannot offer discounts on computer systems, but they could offer me a rebate if I purchased a printer or possibly some other accessories. I considered this; I didn’t need a printer, but if I could get a good discount on a replacement hard drive or graphics card, I might take that option.

The particular store I visited does not sell these types of computer components, so I wasn’t going to find something I needed. The salesperson did work very hard as we thought about different options that might satisfy me.

4. I was patient. When we couldn’t find a good route for a discount other than, in my mind, the computer itself, the salesperson went back to his manager. Still, the word was that they could not and would not offer a discount off the price of the desktop. We looked online, the salesperson on the store computer and me on my BlackBerry, to try to find other stores offering the system for less.

The store’s system of price matching is designed to wear the customer down. The salesperson has sixteen competitors’ websites bookmarked in Internet Explorer, and the process calls for searching for the product on each website in order to find a store with the product in stock and for sale at a lower price.

As I mentioned above, this is a very bad time for buying a computer with stores keeping not much in stock, so I knew this search would be fruitless.

On my BlackBerry, I did find a better price on NewEgg.com, but as expected, the store would not match an online-only price. The price at NewEgg was $30 better than the price in the store, which would have been a discount of less than 5%.

5. I made my final offer. After about thirty minutes in the store, we still weren’t going anywhere. The sales manager wasn’t ready to budge, and I wasn’t going to pay full price yet, even though I knew I needed a new computer by the end of the weekend. I didn’t let the salesperson know that I needed the computer immediately. In his mind, I could just buy the computer online. I told the salesperson that unless they can give me $30 off, that is exactly what I would do.

6. And then I walked out the door. But I didn’t get very far. As I was walking towards the door, I could see the salesperson and the manager in a frantic discussion, and as I stepped outside, I was called back into the store. There were going to make a deal on the desktop.

Patience still played a key role. I waited for what was probably another twenty minutes as the salesperson was in the back of the store, bringing the computer out. There were obviously some more problems because he came out twice without a computer and spoke to the sales manager.

Eventually the salesperson brought out the computer. The box had been opened, but the machine had never been used. It was not a display model or a customer return; the box had been opened because another customer’s keyboard was defective. They took the working keyboard from this computer and gave it to that customer, so mine was without a keyboard. They gave me the working keyboard from the display model and knocked $80 off the price.

That was more than my final offer, so I accepted. My discount in total was more than 10%. I spent more time in the store than I had originally planned but I got what I wanted for a price that was better than I thought I could have received. Even considering the replacement hard drive and the graphics card I purchased later, I talked my way into a great deal.

In the end, I got what I wanted, and so did the salesperson. Everyone wins.

I am not a very persuasive or aggressive person, so it’s a bit against my nature to work so hard just to save $85.59 including tax. I definitely think it was worthwhile. I always suggest at least trying to bargain, even when faced with resistance.

{ 16 comments }



Our theme for today’s podcast is haggling and negotiating. The first guest in today’s Consumerism Commentary Podcast is Herb Cohen, author of You Can Negotiate Anything and adviser to Presidents Jimmy Carter and Ronald Reagan. Herb speaks about the experiences that led to his work in high profile negotiations and offers tips for everyday haggling based on these experiences.

Also appearing in today’s Podcast is Teri Gault, author of Shop Smart, Save More and creator of The Grocery Game. Teri Gault proved listeners with specific advice for negotiating in retail stores and finding the best coupons online.

 

To listen, use the player above (Adobe Flash required), download the podcast here, subscribe to the podcast RSS feed, or use the iTunes link. Note: open links in a new window (Ctrl-click or Command-click) to avoid interrupting the podcast.

[00:00] Introduction from Flexo
[00:51] Interview with Herb Cohen
[01:27] Herb Cohen’s history as a negotiator
[04:46] Herb’s work as an adviser to Presidents Carter and Reagan
[12:33] Understanding the needs of both parties
[20:30] The right mentality for haggling
[23:31] Interview with Teri Gault
[23:45] The Grocery Game
[24:07] Negotiating with store employees
[25:14] Using leverage
[28:40] Uncommon places for negotiation
[31:48] Haggling with professionals
[32:58] Teri’s favorite haggling story
[34:29] Finding coupons online
[36:54] End

We always welcome feedback from listeners. If you have any comments for this episode or for any other, or if you have suggestions for future episodes, please leave us comments here or email us at podcast at this domain name.

{ 4 comments }

If you are reading this article, it is almost completely guaranteed that you are human. And if you are human and do not have a major cerebral deficit, you have emotions. Perhaps have is not a strong enough word; everything you do, and every decision you make, is controlled by your emotions. Even the strive to take a logical approach to life is an emotional desire. Despite this, and even with the knowledge that you can never fully leave your emotions behind, the best financial decisions are made when you are aware of your emotions, control them to a point, and compensate for the effect they might be having on your decision making.

Emotions in negotiations

In this Sunday’s Consumerism Commentary Podcast, one of our guests is Herb Cohen, a master negotiator who advised Presidents Jimmy Carter and Ronald Reagan on dealing with the Iranian Hostage Crisis. One of his suggestions, framed around negotiating a major purchase like a house, will be not to fall in love with the object.

If you want a good deal, you have to be willing to walk away. If you let your emotions control your decision, you are much more likely to pay more than you should. The salesperson — or anyone else with whom you negotiate — will know right away if your emotions are controlling your decisions and will use this fact to their advantage. Your emotions give your power away.

Emotions in debt

Many otherwise smart people find themselves in unmanageable debt as a result of their own decisions. Not everyone is in debt for this reason, but some who are have made decisions fueled by emotions, where “want” and “desire” were the operative words. When it comes to getting out of debt, you could take an emotional approach or try to put your emotions aside.

As humans are emotional creatures, I can see why some people would argue that an emotional approach to getting out of debt would be successful. And it just might be in the short term. But unless this example individual, in debt due to emotional spending and using emotional decisions to get out of debt, changes their mindset drastically once they are in better financial shape, there is a good chance their emotional decisions will lead them back to debt.

I like to tell people about the Debt Avalanche method of debt reduction because it takes a more mathematical approach to getting out of debt. This approach helps people get used to separating emotions from financial decisions as much as possible. On the other hand, the Debt Snowball method relies on emotions — the same emotions that might have allowed us to find ourselves in trouble and might cause us to falter again. The Debt Avalanche does have emotional components, but it does steer us away from using emotions to guide actions.

Emotions in investing

The only way to make money in investing is to “buy low, sell high,” but this is the exact opposite of what actual trading behavior looks like. Most investors decide to buy after a stock or other investment has shown a confidence-inspiring pattern of price increases. They also decide to sell when the price has declined; if everyone else is selling, causing the price to go down, they must know something that we don’t know. We lose confidence in the investment, and we sell. “Buy low, sell high” is a mantra that all investors know, so why do we ignore this in practice?

The answer is our emotions. Rather that making decisions based on an investment’s underlying value and expectations for the future, we are affected by the media and the stock market. News and price movement inspire fear or excitement, and it takes these emotions to encourage someone to resist inertia and decide to buy or sell.

We can’t fully separate emotions from our ability to make decisions. However, just by being aware of the effect they have can help mitigate the bad choices. How do you deal with your emotions when making financial decisions?

{ 2 comments }

In my life so far, I’ve had three major chances to negotiate a starting salary. The first was with a cash-strapped non-profit organization that had enough problems keeping its payroll account funded every other week. The second was with a company in the financial industry, a segment of that industry that is known for being cheap in the salary department, particularly for an operational position rather than a business unit. The third was with the same company in a different location.

In all cases, I didn’t have a lot of room to maneuver. And rather than spending my time outside the office looking for new opportunities, I’m spending my time working for myself. It would be nice never to need to negotiate a salary for myself again; and in fact, it’s possible I’ll be on the other side of the negotiating table.

But I liked one of the ideas offered by Liz Ryan at Business Week for dealing with a hiring manager whose offer is lower than one feels they deserve.

Go back to the hiring manager and say: “Thanks so much for the offer. The job seems terrific, and I’m thrilled to be moving along in the process. We’ve had some kind of miscommunication along the way, clearly. I’m focusing on opportunities in the $XX range, and the offer I’ve received is obviously way below that number. If you’re set on this type of salary range, I’m not your hire, but it may make sense to talk about having me consult with you as you get your new plans under way and your new hire up to speed.”

At first, I didn’t see this as an option applying to any of my situations, but maybe it would have. And maybe this is not a bad idea for winding down my day job to begin focusing on my own projects full-time.

Liz Ryan offered a number of other suggestions, like accepting the job part-time (wouldn’t they use that as an excuse to lower the salary offer?), but I don’t seem them applying to most situations.

Lowball Salary Offers: A Working Guide, Liz Ryan, BusinessWeek via Yahoo Finance, March 23, 2009

{ 8 comments }