Wealth Building Lessons

I spent the day at the office of a rich hotel owner. He was accepting bids for the construction of a new $10 million, 100 room Hampton Inn, and was kind enough to let me watch the process. I saw two different companies present their bids and both of them had extremely different operating styles. However, the owner and his team had a consistent approach in both cases. They had a rough idea of how much money they were willing to spend on a per foot basis and tried to negotiate on costs that they knew the contractors had some flexibility with. I also saw them put an offer on an adjoining piece of land and I realized what terrific negotiators they were. Just because he was rich didn’t mean he was generous with his money!

While most of us won’t be negotiating multi-million dollar construction projects any time soon, most of us buy a high priced item every year to two, be it a car, a large screen TV or maybe a house. Knowing how to negotiate these costs can definitely help save you a ton of money in the long run.

According to a recent article in the New York Times, up to 25% of shoppers are now haggling over prices at stores like Circuit City, Best Buy and Walmart. The slow down in consumer spending has made shops more willing to reduce the prices in order to keep customers in stores. While I often bargain on purchases myself, the article mentions stories of real pros like the tag-team duo who like to play good cop, bad cop. Very interesting indeed!

Here are some of tips that I’ve picked up over the years to help you negotiate:

1. Always ask for a discount.

If you don’t ask for one, you sure won’t get it.

2. It’s easier for stores to do a price-match than offer outright discounts.

Nowadays they’ll price-match online pricing. Just make sure you take along a print out of the online price.

3. Many stores (usually mom and pop stores) will offer a discount for cash.

Using a credit card can cost a store upto 5% and they don’t get paid for 30 days. Paying cash should always net you at least a 5% discount at a small store. Here’s an account of how using cash resulted in a 34% saving.

4. Look for someone who seems like they’re in a good mood.

The last thing you want to do is negotiate with someone who’s upset because the manager told him he hasn’t been meeting his sales quota.

5. If the salesperson isn’t willing to negotiate, talk to someone else or a manager.
6. Don’t expect to buy a hot-selling item at a discount.

If you’re willing to get an open piece or maybe an older model, you have a lot more negotiating power. Sometimes, the changes are cosmetic or the new features don’t even concern you.

7. Do your research about the product pricing before you leave home.

The more information you have about the product, the better position you’re in. If you know more than the seller does about his product, you stand a good chance of getting the best possible deal.

8. Be willing to walk away if you don’t get the deal you want.

The more desperate person always loses in any negotiation.

9. Practice your bargaining skills everywhere.

The more you do it, the better you’ll get and the more you’ll save in the long run.

10. Always remember that everything in life is negotiable.

And all important things in life involve some form of negotiation, only most people don’t realize it.

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