Consumer guide to markups and how to get the best deal while shopping
Customers usually choose a particular brand or store based on their reputation, perceived merchandise’s quality, and price. With a great number of options, consumers have the power of choice. As such, retailers must apply their full arsenal of skills and knowledge to acquire and keep their customers.
While keeping that in mind, you also have to remember that not every price you see is the price you should pay, at least according to a recent report by The Pearl Source. Everything is negotiable, including the price of the merchandise you are willing to buy. And why is that the case? It all comes down to MAP, or minimum advertised pricing.
The true nature of price creation
Most people believe merchandise has “normal” prices, and they reveal what the seller wishes to receive for a particular product. For example, a shirt is purchased from the supplier for $18 and sold for $60 into the store. So that “normal” price is with 70% markup. During the sale, the price is down to $54.99, and when the “deep” discounts are on, the price is $31.99. Consumers believe they got a winner, but this is only because of the way the price is perceived.
Many retailers work backward. They count the first price like a markup, where just a few will pay for it. The sale price becomes its normal price, while only the “deep” discounts are the true sale price. So even if most of the product is sold during those deep discounts, the vendor will have their high markup saved.
Prepare yourself for negotiations
Armed with this knowledge, you should be ready to negotiate for a better price. But be also aware that you will need to go against one old instinct – to accept the price that is in front of you without asking any questions. If the price is high, we try to find another option. But we don’t realize that you can negotiate a better price. And to get the best deal, you will need to implement a few approaches that not always come easy:
Do the homework – Before deciding to purchase something with a bigger price tag, check what the competitors would charge for the same product. If you show the seller you have seen that product cheaper somewhere else, putting some pressure to lower the price. Plus, it also tells them that you do not need their offer and you can still get the product somewhere else.
Don’t act fair – The standard negotiation model says that both parties offer their price and eventually settle in the middle. But in your case, the middle is almost always too high for you. When you are making your first offer, make it extremely low. This will place the price anchor low, plus will make the seller act defensively. And even if they had a plan in mind, it will be hard for them to follow it when such an offer is on the table. They will offer a higher price, but not one they initially had in mind.
Be aware of the limit – Know where the seller truly stands. They need to earn some money from the deal, so even when you are not offering reasonable prices, know that they need to walk away from that sale with some benefits.
Be silent – Silence is uncomfortable, so you could use it to your advantage once the seller gives you a price. Rather than responding, look at them without talking. This would make them anxious to fill that silence, often trying to explain their offer. Allow them to talk while feeling insecure. And if you have to speak, express skepticism about accepting their price tag.
Walk Away – By some, this is your most powerful strategy. Nowadays, very few stores can bear to waste a sale. And this is what gives you a better negotiating position. Sometimes, verbally ending the conversation or even heading out of the store will be enough to get a better offer. Although it is an extreme approach, many times can do the trick.
Remember that everything is negotiable. And although not all of the above-mentioned tactics will work everywhere, it is good to know that. Just make sure to avoid negotiating when you are pressed with time, as the lack of time can set you up to pay a higher price. Start your search on time, no matter what you plan to purchase, and don’t be afraid to put your negotiating hat.