Want to Get It for Less? Just Ask

From the San Francisco Chronicle.

"In an economy that has been challenging for most Americans, there exists a money saving option that has a high rate of success, works quickly, and can save the average consumer a great deal of money. And yet most consumers don't practice it. Money Smart author Ted Hunter says that negotiating is a must-have financial tool.

Make it a habit to always ask for a better price. Knowing just the basics about how to negotiate can result in saving money. According to a 2007 Consumer Reports National Research Center study, when people asked for a better price, they received it more than two-thirds of the time. The study also showed that over 70 percent of the time, consumers simply don't ask.

Ted Hunter says that negotiating can be a simple and quick process once you know the three key steps: asking, taking turns, and silence. Consumers can negotiate for better prices on cell phone plans, bank account fees, credit card interest rates, furniture, appliances, costs for hotels and airfare, and even medical bills. Hunter suggests calling every single company that sends you a monthly bill, like credit card companies, to ask for a lower rate or fee.

Asking is the most powerful negotiating tool. Always be friendly, but ask for a better price. Take the scenario of calling a credit card company to negotiate a reduced interest rate: Be courteous and simply ask for a better rate. If appropriate, tell the representative that the current rate is higher than those offered by other companies. Make receiving a better rate a condition for maintaining the account. The same approach can be applied when making large purchases.

For purchases of items like furniture, ask the sales person for the best price and then tell them you will think about it and act like you're done and going to leave. To most salespeople "think about it" is a kiss of death and there's a good chance they'll sweeten the deal. If you do actually end the call or leave, you can always come back. Remember, the pressure is usually greater on the sales person than it is on you. You can almost always buy elsewhere, but for them it's a sale and a commission that will be lost for good.

The next negotiating key is to take turns. According to Hunter this approach is really rather simple. "You go, then I go. This frequently results in the two parties ending up in the middle between their respective starting positions. The trick is to get the other person to go twice. This can often be accomplished by responding to their offer by saying that it is more than you had hoped to pay and then waiting for them to speak again," says Hunter.

This leads to the third step -- silence. Silence is very powerful. In most negotiations there will be a critical make-or-break moment. Be on the lookout for it and remember that whoever speaks first usually loses. In instances where the sales person and the customer are taking turns, keeping quiet creates pressure on the sales person to bring the price down or risk losing the sale.

Negotiating is a quick way to save a lot of money in a very small amount of time. "Everyone should negotiate, it just makes sense," states Hunter. By remembering these quick, commonsense negotiating tips -- ask, try to get the other party to take an extra turn, and wait patiently and silently for a lower price -- consumers have the potential to save a lot of their hard-earned money."

My two cents on negotiation.