Shopping for deals is so much fun because most of us like getting something on sale, we like the tags on product that say: Now!!! 129.99 Down From 280.00. A sale is awesome, but do you know what can give you a better feeling of accomplishment and euphoria than a sale? The feeling get this from “A Bargain” because a bargain is like a sale plus, think of this, you go to a store and you see a product on sale like the tag we had earlier 129.99 down from 280.00 and you talk the sales manager down to 100.00, Wow you see, that’s why I call it sale plus. So with this blog, I will talk about the evolution of economics from the barter system to the money system, and how to haggle your way to bigger savings through Bargaining.
What is a Barter System?
A barter system is an old method of exchange. This system has been used for centuries and long before money was invented. People exchanged services and goods for other services and goods in return. Today, bartering has made a comeback using techniques that are more sophisticated to aid in trading; for instance, the Internet. In ancient times, this system involved people in the same area, however today bartering is global. The value of bartering items can be negotiated with the other party. Bartering doesn’t involve money which is one of the advantages. You can buy items by exchanging an item you have but no longer want or need. Generally, trading in this manner is done through Online auctions and swap markets.
History of Bartering
The history of bartering dates all the way back to 6000 BC. Introduced by Mesopotamian tribes, bartering was adopted by Phoenicians. Phoenicians bartered goods to those located in various other cities across oceans. Babylonian’s also developed an improved bartering system. Goods were exchanged for food, tea, weapons, and spices. At times, human skulls were used as well. Salt was another popular item exchanged. Salt was so valuable that Roman soldiers’ salaries were paid with it. In the Middle Ages, Europeans traveled around the globe to barter crafts and furs in exchange for silks and perfumes. Colonial Americans exchanged musket balls, deer skins, and wheat. When money was invented, bartering did not end, it become more organized.
Due to lack of money, bartering became popular in the 1930s during the Great Depression. It was used to obtain food and various other services. It was done through groups or between people who acted similar to banks. If any items were sold, the owner would receive credit and the buyer’s account would be debited.
Disadvantages and Advantages of Bartering
Just as with most things, there are disadvantages and advantages of bartering. A complication of bartering is determining how trustworthy the person you are trading with is. The other person does not have any proof or certification that they are legitimate, and there is no consumer protection or warranties involved. This means that services and goods you are exchanging may be exchanged for poor or defective items. You would not want to exchange a toy that is almost brand new and in perfect working condition for a toy that is worn and does not work at all would you? It may be a good idea to limit exchanges to family and friends in the beginning because good bartering requires skill and experience. At times, it is easy to think the item you desire is worth more than it actually is and underestimate the value of your own item.
On the positive side, there are great advantages to bartering. As mentioned earlier, you do not need money to barter. Another advantage is that there is flexibility in bartering. For instance, related products can be traded such as portable tablets in exchange for laptops. Or, items that are completely different can be traded such as lawn mowers for televisions. Homes can now be exchanged when people are traveling, which can save both parties money. For instance, if your parents have friends in another state and they need somewhere to stay while on a family vacation, their friends may trade their home for a week or so in exchange for your parents allowing them to use your home.
Another advantage of bartering is that you do not have to part with material items. Instead, you can offer a service in exchange for an item. For instance, if your friend has a skateboard that you want and their bicycle needs work, if you are good at fixing things, you can offer to fix their bike in exchange for the skateboard. With bartering two parties can get something they want or need from each other without having to spend any money.(www.mint.com) However money filled the gaps that bartering exposed.
The Emergence Of Money
After the domestication of cattle and the start of cultivation of crops in 9000–6000 BCE, both livestock and plant products were used as money.
In the earliest instances of trade with money, the things with the greatest utility and reliability in terms of reuse and re-trading of these things (their marketability), determined the nature of the object or thing chosen to exchange. So as in agricultural societies, things needed for efficient and comfortable employment of energies for the production of cereals and the like were the most easy to transfer to monetary significance for direct exchange. As more of the basic conditions of the human existence were met to the satisfaction of human needs, so the division of labour increased to create new activities for the use of time to solve more advanced concerns. As people’s needs became more refined, indirect exchange became more likely as the physical separation of skilled labourers (suppliers) from their prospective clients (demand) required the use of a medium common to all communities, to facilitate a wider market.(Wikipedia)
The Spread Of Money: the spread of money throughout the Mediterranean didn’t mean that it was universally used. Far from it. Most people were still subsistence farmers and existed largely outside the money economy.
But as money became more common, it encouraged the spread of markets. This, in fact, is one of the enduring lessons of history: Once even a small part of your economy is taken over by markets and money, they tend to colonize the rest of the economy, gradually forcing out barter, feudalism, and other economic arrangements. In part this is because money makes market transactions so much easier, and in part because using money seems to redefine what people value, pushing them to view things in economic, rather than social, terms.
Governments were quick to embrace hard currency because it facilitated the collection of taxes and the building of military forces. In the third century B.C.E., with the rise of Rome, money became an important tool for unifying and expanding the empire, reducing the costs of trade, and funding the armies that kept the emperors in power,
Money Changed The Barter System To The Bargaining System
Traveling overseas, you would see this in action, a customer asking for a product with no price on it, the merchant responding with a price, then the customer makes an offer, then the merchant makes another pricing offer, then the customer say “what If I buy five, can I get it cheaper?” the merchant says “Yes” and there , we have A Bargaining: haggling, bartering (or “farting about the price” directly translated from Danish – don’t ask me why) is a term known to almost everyone. However, to those who don’t know, in short it’s the art of securing the best price when buying/selling goods. As the customer you want the price to be low and as the seller you want the price to be high. This guide is written from the buyer’s perspective.
I’ve written this guide because I feel that I’m a halfway decent bargainer and during the last 12 months, I’ve spent 9 of those in Southeast Asia which really gave me a chance to sharpen those skills. I base my self-proclaimed proficiency on the fact that I usually get low prices compared with other (western) travellers for the same goods (the same tours, the same food and the same clothes etc.). I also have a Vietnamese girlfriend which gives me a good grasp of what prices I should be getting. As a westerner, getting local prices is not common.
BARGAINING IN TODAY’S WORLD
In western cultures we only rarely haggle as most prices are fixed and non negotiable in shops. You might be able to get a small discount but short of flea markets/yard sales, the used car market, and a few others there isn’t really much to be done so although being good at bargaining can get you a few good deals, in the long run, the main benefit of bargaining in western cultures is probably that happy sensation you get when you feel like you just saved some money. Because let’s admit it, everyone loves being “smart”, ie. booking the hotel at the lowest price, utilizing a coupon, or saving some money on gas. Knowing that the guy next to you is paying twice the price you are, for the same thing, just makes the bed a little bit softer and the steak a little bit juicier.
Now, when you turn your eyes towards other parts of the world like the middle-east, Africa or south-east Asia bargaining becomes not only useful but completely necessary and unavoidable, especially if you spend your time anywhere slightly touristy. Just for being a tourist, you’ll easily end up paying 10x the price or even paying for something you shouldn’t be paying for in the first place. Everything is negotiable. Period.
So without further ado, let’s get started
KNOW THE VALUE OF WHAT YOU’RE BUYING
This is a big one. Know the price of what you’re trying to buy! You have a valuable advantage if you know what you’re supposed to be paying (let’s call it local price). The vendor already knows how low he can go and still make a profit. You need to get as close as possible to that limit. For more common things like water, you can just go straight for the local price. If you know it’s $1 around the corner don’t even haggle. Just demand the water for $1. In most cases he will agree as you and him both know it’s a fair price and he is still making a profit – quick and easy. I’ve seen friends buy water for $4 when I just bought a water from the same guy for $1.
Knowing the value is essential in almost any purchase. You have no idea if you’re getting a good price for that cab ride from the airport if you don’t know what the general price for a cab ride is in that country. Hell, if you don’t even know the currency you’re bargaining in, things get rough. Add to that the fact that you probably don’t speak the language and their English is limited at best.
Taxi: “City center – 500 baht”
You: “Uh, how much is that in dollars?”
Taxi: “City center – 500 baht”
You: “How far is it?”
Taxi: “City center – 500 baht”
You: “Ok, thank you…”
If you’ve done this trip before and you know the price to your place is 300 baht, just show him 300 baht and the address. He’ll say yes.
ASK SEVERAL VENDORS ABOUT THE SAME PRODUCT
If you want to buy, say a pair of sunglasses, you might feel good about bargaining the first guy you ask down from $10 to $5 thinking you’ve saved 50% but if the real value is closer to 3$ then it wasn’t such a good deal after all. If you’re not so lucky as to know the price beforehand, asking multiple vendors gives you ballpark numbers. In some cases, this won’t work though, for example when I was in Ukraine I asked the first taxi driver for the price and then he followed me around for the next half hour and surprisingly enough every cab driver I asked after this, gave me the same price. I even tried asking a police officer but the same thing happened – the cab driver that followed me around told him what to say. In the end I got the real price (much lower – about 1/3) from a random bystander who saw me walk around. None of the people spoke English but luckily both me and him spoke German so he arranged to get a taxi for me at the heavily discounted price.
ASK STAFF, FRIENDS AND THE INTERNET
Hotel/hostel staff can be a huge help in figuring out prices. Not only will they know the prices but often they will know which market to go to, to get what and when etc. which can be a tremendous help. If you’re real lucky they will even help you go and buy it which has happened many times for me. Other travellers in the area that you happen to meet will also give a good idea of the prices and finally of course, you can consult the internet, aka. Mr. Google. Take note that foreigners might be wrong and the internet might be outdated. Hostel staff is usually your best bet but sometimes you can’t speak their language or other things might prevent you from asking them.
EXPERIENCE AND COMMON SENSE
This might seem obvious but the point here is that you pay attention to what you pay instead of just paying. You also try to see what kind of shop you just got that cheap meal in – for example in Vietnam when something has “binh dan” in the name it’s cheap. This means “Popular” or “Common” or “Working Class”, in other words it’s the budget solution. You can also use common sense to figure out that when you just bought a cab ride for 20k and the next guy wants 200k for roughly the same length of ride – something’s wrong. This applies for everything – try to get a general idea of how expensive in the country is. This can be hard when you first enter a new country but after a while you get an idea of the general price which can weed out the most ludicrous prices.
When I’ve travelled in Myanmar, Thailand, Vietnam, Laos, Malaysia and Cambodia I don’t have to start all over again if I go to for example The Philippines or Indonesia.
USE CASH AND USE EXACT MONEY
Credit cards can be fine and in some parts of the world you won’t ever need real cash but in the rest of the world and in places where you typically want to haggle, cash is king. There are a number of different benefits of being able to pay in cash.
The first reason is the immediate nature of cash. You get your goods; they get their cash – instantly. Credit cards, bank cheques, bank transfers and promises of future prosperity can all be good and well but with cold cash in hand the deal is done right then, right there. You don’t have to wait for days for a cheque to clear or the bank transfer to come through and you probably do not have a credit card machine to instantly verify the authenticity of the card. Cash can be counterfeit but that risk is slim and if someone moves into that class of criminality it’s a whole different ballgame. Lately, mobile transfers (very quickly transferring cash directly using your cell phone) has started to move in on the territory of cash as it’s also fast, precise and reliable (safe). For the most cases, though, you both need to have bank accounts in the same country and an internet connection which sets its clear limitations.
Secondly, cash has a psychological effect. You can dangle the money in front of the vendor and/or use the familiar: “I know it says 50k dong on the sign but I only have 35k dong on me, is that enough?”. If you are paying by any of the other ways, this trick (which is surprisingly effective), won’t work. It also works in more subtle ways, for example if it says 1 for $6 and 3 for $15 and you only have $10 you can say: “I only have $10, can I get two for that?” so that you get the bulk discount without having to buy all 3.
Roaming vendors in Sapa, North Vietnam taking a break and having a chat
Thirdly, as an extension to the above two reasons, cash makes the transfer fast and simple which are valued highly by a busy vendor. If you don’t have exact cash, the vendor might try to get more money out of you by saying he doesn’t have change on your bill hoping you’ll just give him the full bill rather than not buy the goods. Taxi drivers often do this, maybe accompanied with a quick “tip, ok?”. If you don’t accept given him that tip he could make you go through hoops like going to a nearby store to change the large bill and in the end you just end up saying whatever and giving him the money. It’s usually not a lot of money but it all adds up in the long run.
Alternatively, the deal just falls through simply because your bill is too large and he simply can’t give you change which is a shame seeing as you’ve both just come to a fine agreement.
MAKE THE VENDOR SUGGEST A PRICE FIRST
Simple but good advice when you don’t know what the price is supposed to be. Anyone who’s been doing salary negotiations have probably also heard this advice before. Let the employer offer you a salary first and then work from there. If you make the first move and set it too low, you’ve done yourself a disfavour and might even appear unserious. On the other hand, if you set it too high, you might seem greedy or infatuated with yourself to name a few things.
In short: let the vendor/employer give you ballpark numbers first and work from there.
SAY HOW MUCH YOU WANT TO PAY INSTEAD OF ASKING FOR THE PRICE
This applies mostly when buying by the kilo or buying by size rather than number. As mentioned earlier, knowing the value of whatever you’re buying makes it easier for you to haggle. Besides showing the vendor a degree of confidence – you know the prices, you’ve done this before, don’t f*** around with me – it also plays the ball to this court, forcing him (or her) to make the first move on prices. Say you want some watermelon and instead of asking how much for a specific watermelon, say you want $3 worth of watermelon and then let the vendor pick a watermelon of appropriate size. Sometimes the vendor might pick a surprisingly large watermelon or even two watermelons which means you’ve grossly overestimated how much watermelon costs but now at least you know because he/she just made it obvious to you.
Flower market in Bangkok
Conversely, if you say “Can I buy that that watermelon for 3$?”, it makes it easy for the vendor to just say yes even though it’s actually only worth $1. Of course, if you know that this particular melon is worth $1.10 and you demand to buy it for $1 you potentially saved yourself $0.10 but that is not a likely scenario and requires you to have a pretty firm grip on watermelon prices. It works for water because water is the same price all over town – for watermelons… let’s call it advanced bargaining.
Asking several vendors, the same question also gives you an idea who gives you the best prices simply by visually showing you what your money’s worth. Of course with things such as fruit there is also the topic of quality but that’s a whole different aspect and is essentially a sub category of knowing the value of what you’re buying.
DON’T SHOW LARGE AMOUNTS OF MONEY
Appearances do affect the prices you get. If you look like a rich westerner in fancy clothes and you flash large $$$ bills everywhere you go, it’s only natural they will try to ask you for higher prices. I wouldn’t recommend “dressing up”, or more accurately “dressing down”, for going to a market because it’s not that important but “appearing poor” does have an effect and so does a large wad of cash. Bringing smaller bills also gives you higher granularity of paying the exact amount.
There is also the aspect of safety. If you are walking around a crowded local market with large amounts of cash sticking out of your back pocket or with money sitting there quite visibly in your wallet whenever you pay for something makes you an obvious target for pickpockets and/or scammers.
BE WARY OF SCAMMERS
Scammers might try to push the prices up by telling you that just today it’s more expensive so the prices you’ve read on the internet are normally correct, just not this particular day.
A common example is cab drivers (yes, cab drivers are notoriously unethical) who will tell you that you need to take a large de-route because of a traffic jam or a road work. While he may be right, you have no way of knowing and most likely he just scammed you out of a few extra moneys. Your only defense against this type of behaviour is asking others beforehand so you know or simply calling his bluff by telling him to run right into that traffic jam, you’ve got lots of time.
Another example is in Bangkok where you can choose to take the highway or not. The highway has tolls on it and is longer and therefore more expensive – but faster. The cab driver would want this as he racks up more money faster (faster speed of the car, faster spinning of the meter) – traffic jams gives him very little money for his time. He will try to convince you to avoid the local roads as there is a traffic jam or road work to get you on the highway but in most cases this is not the case. Last time I had to take a taxi, I knew this because I had asked the hostel staff and although he asked multiple times to go on the highway I kept firm and it saved me about 30% of the price while only extending the trip from 50 to 60 minutes.(worldwidewinther.com)
Our top 10 Hot tips
- Be flexible and also remember that sometimes you are bartering over mere cents. Keep in mind how much the item you are purchasing would cost at home.
- Be prepared to walk away, if you feel like you are being reasonable and the vendor is asking far too much, politely say thank you and proceed to walk out of the store, chances are if your offer is reasonable, the vendor will chase you and agree to your price.
- Always smile, be happy, joke and laugh with the vendor, don’t ever get aggressive or angry as this is not the Thai way, you will lose face and embarrass yourself. Remember this is a fun activity; there is no need to be aggressive.
- Feel free to provide a small tip if someone has done a good job to help you or accommodate your sale; this is earn you a BIG smile and make that vendors day! (while this isn’t required it would certainly go a long way for some vendors, if you have a bit of change).
- Don’t be shy, bartering is a part of the fun at market stalls, it’s the best way to get the best price when shopping and a part of the culture.
- Look around at different vendors before making your purchase or enquiring about price. People often make a purchase at the first place they see and then miss out on a bargain or getting something in the colour they wanted or for a better price.
- If a vendor is really pushy (and yes sadly, there are a few vendors like this), just say thank you and walk away, chances are they are not going to give you a good deal and will try to guilt you or push you into the sale.
- The more items you buy, the better deal you will get, make sure to look around and pick out a few items and ask the vendor for the best deal!
- Have the money you want to spend in one pocket, if you pull out a 1000 baht note after haggling down to 200 baht, the vendor may be offended. Instead provide 2 x 100 baht notes and explain this is all you have and don’t keep bargaining once the deal is agreed upon, it’s rude.
- Use lines like: “I’ve seen this cheaper somewhere else.” And “I’m not really sure…” or look at your friend/partner and say “I don’t know, what do you think”, the vendor will see you are not sure and try to give you a “discount”(www.travellingking.com)
Bargaining or Haggling can be done over the phone with Amazon, just ask for “Customer Service” and tell them of another store’s price, that are lower than there or at Walmart or Sam’s Club but remember don’t haggle with a sales person, always ask for a manager, most of the time they will accommodate you. Try it and have fun, the better at it you get the more rewards you will reap!!!!