Nearly everyone likes a bargain and we all know people who will drive great distances to save 50c on a packet of sugar. But we reckon there's another, better way to save money, and it won't cost anything in petrol - and that's haggling.
Although haggling is not part of our shopping culture, the truth is most shopkeepers don't mind doing it if it means they will get your business. Most things are negotiable, so you should not feel shy about asking someone for "their best price" or asking if they "can sharpen their pencil" and see what they can do about the price.
We think of it like this: it's a free country, and as a famous economist once said (paraphrased in our own wording), "If they don't wanna do it, they won't." In other words, in a free market someone will only accept your offer if it's in their interests to do so.
The thing about negotiation is that because most people don't like it, they don't do it. Or, if they do, they try to get it over and done with swiftly. The trick is to know how much you can buy something for elsewhere, know what your maximum price is, and be polite. Ask how much they would accept for cash.
Or say you like the product but ask if they could sharpen their pencil on the price. Or ask them for their best price if you were to make a decision about this today? Or simply tell them the price their competitor is offering and ask if they can better it.
If you get to a point where you can't agree on price, work on other issues. Try negotiating payment terms, or the inclusion of extras that you would otherwise pay for in cash.
For example, let's assume you buy a secondhand cooker from a store. The asking price is $400. You offer $350, but the lowest the dealer will go is $375. You say this is more than you would like to pay, but you will agree to it - if the dealer will offer a two-year guarantee on the appliance instead of the usual six months. You settle on an 18-month guarantee. The result of the negotiation is that you have saved $25 and you have an additional 12 months of guarantee. With a bit of haggling you have gained something for nothing - and getting something for nothing is what those living off the smell of an oily rag like to do.
If you are dealing with someone who does not have authority to negotiate on price ask if the manager is available to chat about it. Haggling is well worth doing and all those savings put significant money into your pocket. Let's assume that over the next 40 years you spend $400,000 buying things - that's $10,000 a year buying big-ticket items. Now assume you can haggle 10 per cent off the price of everything. At the end of the 40 years you will be $40,000 better off - and that's ignoring the compounding interest you would earn on that money if you used it to make additional mortgage repayments.
Most sellers will give you a 10 per cent discount without a second thought. Some people think haggling is a "shrink", but if it's done right - with a cheeky smile - it can be a lot of fun. And "fun" is what living off the smell of an oily rag is all about.
Frank and Muriel Newman are the authors of Living Off the Smell of an Oily Rag in NZ. Readers can submit their oily rag tips at www.oilyrag.co.nz