"You buy!! You buy!"

"I give you cheap price. Good quality. Ok you buy!"

We've probably all heard this while roaming around the markets of a random Asian country searching for a bargain. Did you find one? How do you know? Was it because you would have paid more for it? What is a bargain anyway? Bargaining flows beyond our backpacking journeys, permeating to every aspect of our lives. It's not only limited to saving 100 baht on those string lantern lights you want to hang around your apartment, but also includes major decisions such as which mortgage to buy, and right down to who will clean the dishes tonight or having that one extra scoop of ice cream for a promise to do ten extra sit-ups tomorrow.

For the next few days I'd like to look at bargaining (at least until one of us gets bored), some theories behind it (not too much, don't worry), personal experiences, tips to save a few pennies so you can buy that wooden frog that croaks when you stroke it's back, and, hopefully, hear some of your own experiences and opinions.

A TYPICAL BARGAINING SITUATION

Overpaid JET: OH! My mother would love this batik! How much is it?
Thai merchant with thin mustache: 2000 Baht!
Overpaid JET: ohhh, that's too much. Thanks anyway.
Thai merchant with thin mustache: Good quality! How much you pay?
Overpaid JET: (well the LP told me to halve everything. I'll be bold and say...) 800 Baht!
Thai merchant with thin mustache: Ahhh I make no money. Ok, I give you good price, 1600 Baht!
Overpaid JET: 1200 baht.
Thai merchant with thin mustache: This good quality!! 1500 baht.
Overpaid JET: 1400.
Thai merchant with thin mustache: Ok ok you win, 1450.
Overpaid JET: Deal! 1450! Here's a 1000 and 500 bill.
Thai merchant with thin mustache: I keep change?
Overpaid JET: Ok. (Wow what a great bargain! I can't believe that guy tried to rip me off for 2000 baht!)
Thai merchant with thin mustache: Come back later I give you good price. (Haha, stupid tourist. I can't believe he paid 1500 for a batik)

This is how my first few market transactions occurred until my friend and former British JET, Neil Ramchandani, schooled me in his self-proclaimed "Indian barganing tactics".

When you ask a merchant a price, he'll say some ungodly high price to confuse your sense of what the item is actually worth. Before you get a chance to walk away, he'll tell you to name your price. He reads the Lonely Planet just like you, so he knows you're going to halve what he said. That's why he quintupled what it actually cost him. After you halve it (or even make it 1/3), he'll bargain the price back up.

Neil R's successful strategy: For that batik, when the merchant asks for you to offer a price, say something incredibly low like 200 baht. At this point the merchant will go berserk about how he is "making no money". Bargain with him a bit to make him feel good, but only add another two or three hundred to the price. After it hits, say, 500 baht, tell the merchant that's your final price, and if he refuses, then walk away. If he actually isn't making any money, then he'll let you walk away. Now you have a better idea of what that item actually costs, so you can buy it at the stall next door. If he does call you back to make the sale, then he IS making money.

I leave you with the question, was this an ethical transaction?


Things to come:
reservation price - how low can you go?
barganing in everyday life - who's doing the dishes tonight?
bargaining leverage and bluffing - screwing the other person
comparative advantage - Big country to developing country - "if we trade, we'll both be better off!"
ethics - what?