I have experienced two citywide blackouts in New York City. It puts people on edge, makes them afraid, and desperate. When they go to the local store, what happens? The tenets of conducting fair business go out of the window. Storekeepers make up prices as they go along, raising prices as much as they want, treating regular patrons, people they know, as though they are in a pricey auction for a bottle of water or paper towels.
Then, when the blackout ends, consumers are expected to follow the rules of business and pay whatever price they are given. It’s called price gouging and yes, it is illegal. But during blackouts and other similar emergencies, police authorities have concerns of higher priority. Still, the experiences taught me something.
Business is all about your negotiation skills. Negotiation is not about arriving at a, “yes,” to the benefit of the business on their terms. It’s about understanding, self-determining, and manipulating the path to a potential agreement on own your terms. Businesses can change transaction terms when it suits them. So, why can’t you?
The Art of Negotiation
You don’t have to be aggressively rude, but it is not your job to be aggressively polite and accommodating either. Businesses depend on you to be polite to manipulate transactions in their favor. To negotiate, you need to know the true worth of the items and products you plan to buy. You need to understand the retail business market, like inventory schedules. Also, be prepared to walk away. Last time I checked, there is more than one business in existence.
Have you heard of the manufacturer’s suggested retail price or MSRP? Listed retail prices for a jar of pickles, a blouse, a handbag, or a car are suggested by manufacturers to keep prices level for these items wherever they are sold. It’s a suggested price, not the final price, for sales. However, when stores clear inventory, when there is demand or a blackout, they can raise or decrease prices as they see fit.
Learn how much competitors are charging for the products you want to buy. How much do stores, vendors, and merchants pay wholesalers before marking up prices? If you learn when businesses clear inventories, then you have transacting leverage. Have all of this information before you begin negotiating. Otherwise, you’ll embarrass yourself.
Weaponize Information in Your Favor
Imagine that you are buying a $37,000 sticker price car. You know what competitors are charging and the markup costs to consumers. Make the business name the price. Then you name a price near, at, or well below the competitor price to give you negotiating room in your favor. Negotiation is about give and take, hopefully with you, “taking, more.
Businesspeople like to feel like they won something. If you say, “$32,000,” and the counteroffer is, $35,000, it’s still below the sticker price. You have leverage if the dealership is moving inventory and making room for new models. Perhaps the dealer is in a price war with other dealerships. Or, maybe business isn’t good. You need to financially weaponize such information, before negotiation, to gain leverage.
You are not going to get the car for free, so know the limit. Be strategically quiet during negotiations. This will put the seller at ill-ease since they are used to overly polite and overly accommodating consumers. Ask for free extras to get the sale. Walk away if you must. There are other car dealerships.
Know Your Worth
The average American makes about $45,000 annually, or, about $860-a-week after taxes. After paying bills and expenses, there isn’t a lot of money to waste on shopping. Don’t just accept the final prices presented to you. Those prices aren’t final for the business, after all.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.