How to Haggle with Customers
Last Updated: Jun 28, 2019
Although it might come as a surprise when customers want to haggle, don’t be offended. Instead, use these tips to negotiate the best deal for both of you.
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You want to get the highest price for what you’re offering but the customer wants to pay the least amount possible. These opposite goals inevitably lead to something consumers and businesses know well: the haggle.
Haggling, negotiating, or whatever you call it can go one of three ways: they win, you win, or everybody wins. Ideally, you hope that everybody wins so you get the price that allows your business to grow while making your customer happy so they become a long-time buyer. Here’s how.
Don’t Take It Personally
Some business owners see haggling as a sign of disrespect. If you get offended and defensive when somebody asks for a discount, it’s time to change your thinking. Consider this: If you could pay your vendors less for the goods or services you purchase, would you? You’ve probably “negotiated” terms with vendors already. Paying the least amount possible is good business.
Or maybe it’s the opposite of disrespect; maybe the customer wants to do business with you but you’re out of her price range and she’s trying to figure out how to make the arrangement work.
Simply put, don’t assume the worst. There will be people that want to haggle and won’t purchase from you unless you give them garage sale pricing but that’s not the majority.
Have a Standard Discount Ready
If you don’t have much room to negotiate, have a standard discount ready. You don’t have to place it in plain sight or make it sound standard. It could be a volume discount that you’ll extend to customers not purchasing a large amount or a friends and family price that’s unadvertised. The discount could be small—10% but just offering a discount might be enough.
Instead of open-ended haggling, price match instead. Tell a customer that if they find a lower price somewhere else, bring it to you and you’ll match it. Extend that by giving the customer a certain amount of time—maybe 90 days—to find a lower price after the sale that you will match.
But there’s a disadvantage to such a policy. Allowing the customer to leave the store to price match gives them little reason to return. Either offer to go 5% or 10% lower than the lowest advertised price they find or pull up prices online while they’re at your store. You don’t need to openly advertise your price matching policy either.
Add a High Margin Product
Anybody in the retail business knows that adding accessories to the deal increases the overall margin of the package. Offer a larger discount on the main item if they purchase certain higher-margin accessories. You might end up getting much of that discount back from the other products.
Cash (or check) is old-school but it has a big advantage that credit cards don’t– there are no interchange fees. Depending on the card, and what state in the US your business is located in, you could be giving up 3% to 5% in profit on those credit card swipe fees. If you were going to pay the fees anyway, why not offer the customer a 5% cash discount? They get what they want and you lose very little, in reality. Before doing this, check to see if discounting for cash payment is allowable in your state.
Don’t Negotiate Only on Price
The customer might be focused on price but you know that there’s more to talk about than dollars and cents, especially if it’s on a larger ticket item or one that has other elements like setup and delivery.
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Consider these negotiation areas:
- Payment terms- Offer them 30 or 60-day payment terms, interest-free financing, or go the other way and offer a discount if they pay now. Quick pay discounts work well for B2B companies that offer longer-dated terms.
- Quality or Performance- Is your customer looking for marquis products or services on a small budget? Is there a different product that will meet their needs at a lower price? If you’re a service-oriented business, offering a lower quality experience at a cheaper price invites negative customer reviews later on. Stay away from those types of arrangements as much as possible.
- Delivery- Can you ship using slower, less expensive options? Could they pick the product up themselves?
- Setup and training- If your price includes an on-site element, offer to remove it from the price for customers who have experience with the product. If the product is complicated, and it’s the customer’s first time using it, don’t use this as a negotiation point. The new customer will either be unsatisfied or ask a lot of questions anyway.
When it’s time to negotiate, don’t get defensive or offended. Embrace it as a way to form a long-term business relationship. Be prepared to give the customer something—a discount, a free product, or something else that makes them feel like they got a good deal.
On the other hand, you have to make money. Know when to say, “I’m sorry but we can’t go any lower.”
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