How to Negotiate like an Indian — 7 Rules

139 Comments

sales_transaction.jpg
Guess who won?

Indians have founded more engineering and technology companies in the U.S. during the past decade than immigrants from Britain, China, Taiwan and Japan combined (Source: Where The Engineers Are, Vivek Wadhwa, 2007).

Incredible.

The entrepreneurial abilities of Indians in general has amazed me for years. It seems that Indian culture produces an uncommon blend of innovative thinking, business-minded aggression, and comfort with numbers. But there is another ingredient…

Two weeks ago, I saw a screening of the film 2 Million Minutes, a new comparative documentary that examines education in the US, China, and India. The filmmaker, Bob Compton, also wrote a book titled Blogging Through India, which I thumbed through before the movie.

Lo and behold, it contained this great little description on one of the greatest skills Indians bring to the table:

Negotiation.

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In India, every transaction — EVERY transaction — is negotiated. Merchandise, cab fare, restaurant bills, wedding doweries — the list is endless.

As our guide Vishnu explained, “In India, we bargain to the level of the individual vegetable purchase.”

While awkward and uncomfortable to most Americans, that level of negotiating can be quite valuable.

Hotmail founder Sabeer Bhatia, a CA transplant from Bangalore, credited the bargaining skills he learned in vegetable markets at home for getting Microsoft to push its acquisition price for his company from $160 million to $400 million. Bill Gates’ eye teeth were floating in tea with that deal.

Here are a few rules for bargaining on the buy-side when in India…

Rule #1 – The true price of any item is what you pay — There are no suggested retail prices in India. Nothing is labeled, so it pays to talk with several vendors before making a significant purchase.

Rule # 2 – Try for 70% off — Don’t accept less than 30%

Rule # 3 – Make them show lots of merchandise
— If it is a rug merchant, you want the demo guys sweating profusely before you make your first offer. Get the vendor to “invest” in the transaction — emotion, time and energy.

Rule # 4 – Offer on one item at a time –
If you plan to buy a couple things DON’T let on at the outset. Act like you intend to buy only one item, if that much. Get the seller to give you prices on each item; play one item off another to show you are looking for the lower price point.

Rule # 5 – Wait for the pad of paper
— Every Indian sales person has a pad of paper and a pencil that they pull out when the bargaining gets a bit more serious. Though they write down the price for an item, this is only the starting point – remember rule #2.

Rule # 6 – Say “TOO HIGH”, a lot
– Don’t even start negotiating until the salesman has scratched through the initial price and lowered it at least twice. I found that simply staring in silence at the pad of paper for a long time would result in the vendor cutting the price.

Rule # 7 – Imply a bundled purchase — OK, now that the price has been cut 25-30%, ask the salesman what deal he would give you if you buy two items. Expect 5% off. Ask for three items; get another 5%. Then add a very expensive 4th item — one which you do not intend to buy. This will excite the vendor and he will do a bunch of calculations which you will be unable to follow. The price will come down for the expensive item as well as for the other items you intend to buy. Lock those prices and drop the expensive item.

At this point, you should have been able to shave close to 50% off the initial price. Most Americans generally are satisfied at this point and close the deal.

One final point – no matter what price you pay — if the sales guy is smiling when you leave — guess who won…

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Is it a stereotype that Indians are good at negotiating? Sure. Is it accurate? Just neglect to prepare next time you match wits against an Indian entrepreneur and you tell me.

Do you have your own negotiating strategies, tips, or stories? If so, please share in the comments, and feel free to build on or borrow from the recommendations in the 4HWW.

If you’re interested in checking out 2 Million Minutes, which is provocative to say the least, the next screening is this Thursday, Dec 13 at 7:30pm in the 500-seat Varsity Theatre in Des Moines, IA:

1207 25th St
Des Moines, IA 50311
(515) 277-0404

Fans include Barack Obama. For free tickets, just call Meg Charlebois at 317-202-2280 ext. 11 or email her at Meg@dittoePR.com before Thursday at noon.

Posted on: December 11, 2007.

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139 comments on “How to Negotiate like an Indian — 7 Rules

  1. I realize this blog is old but just want to chip in, in case some one might find it interesting and still read it (like me.)

    I run a small business and luckily don’t have to deal with a lot of Indian customers. However when I have one, it usually is a pain in the butt. They always grind. I have one Indian gentleman (who drove newer model BMW) countered my asking price of an item from $10 to $5!!! And that’s not all, he’s actually said “I’m a man, and I’m not happy until I get what I want.” How ridiculous is that, 50% off!? I wonder if he goes to the McDonald’s drive-through in his new BMW and the cashier asks for $5 for his big mac meal, does he say come on it’s only worth $2.50 and I’m a man blah blah blah..?

    These people need to realize they’re no longer in India! Maybe it’s a way of life for them but it may not be for other people. I just want to scream get out of my store you cheapskate…

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    • Yeh, they can be real bstards to deal with since they take joy in trying to rip people off. The best way to deal with them is to waste heir time. It is the ultimate way to get revenge on them and hopefully change their greedy nature.
      -
      First, go along with their haggling and make them invest their time. Then pull back and say you changed your mind. Break a warm big smile on your face and stare them directly in the eye.
      -
      It’s guaranteed to teach them and lesson and they won’t come back.

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  2. Ah, this post made me smile by reminding me how I got ripped off in India a couple of times :)

    Usually, the cab drivers drive you to places they know the owner of and most probably they get some percentage from the business they bring in. Good for them, bad for us …

    Being from Turkey* I should be used to negotiating, but I’m clearly not. So, I don’t have any tips to help people getting better at negotiating. But I can safely say that trying to negotiate with a smile is not a good strategy :)

    * In Turkey one can easily start negotiations at 15% off .. if you persist they might go down to 40%.

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  3. nice artice…im an indian and suck at negotiating….india is a big and diverse country…there are definitely certain communities here that are considered “business communities”…we say here that business is in their blood….so its not like every indian is a good negotiator. after all, the business guys developed their skills at the cost of other indians !!!
    as a thumbrule, housewives make good negotiators…if you want to see this in action, stop by a fishmarket and enjoy !!!

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  4. I am the owner of a small landscaping business, and I try to avoid work for Indian people all together. The stress of people haggling on already good prices is not worth it to me. A good percentage of my customers the last 3 years were from southern India. And the way that I deal with their negotiations is as such:

    The more they ask for a better price, the worst deal I give them:

    Instead of bringing down the price, I start to minus off materials.Which raises my profit percentage, by keeping the labor the same. Saying “Okay, If you’d like to save money you can buy the plants yourself, and try to find them on sale, and we can minus out the boulders here and here…etc..”

    Basically they will believe that they are getting a good deal, until everything is said and done and they add up all their receipts.

    I try to keep from smiling when I walk away from those deals.

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  5. If you really want a unique product and you tick off the seller are you really further ahead? When you insult the seller, you often pay more for the product or the seller refuses to sell to you. The response is often “Flock off, I won’t sell to you at twice the price.” Win Lose negotiating doesn’t work too well in the west when you are trying to acquire a scarce product or service.
    Haggling works in theory when you have a standard product ie) a vegetable is a vegetable and you can buy from the guy down the street who has the same product. Haggling fails when you have a unique product or service. People in the west will pay more for it. It is called value added and that is something that hagglers don’t understand. If you have a service that saves a buyer time, people pay for it. Time is money in the west. Haggling wastes time and energy, hence haggling is a cost and not a benefit to successful businesses in the west.
    Then there is the phantom “promise of future business” that these hagglers always throw in. “Do this low deal once, and all my friends and family will buy from you in the future, I promise”. They never consider the fact that the seller may not want a bunch of future deals built on razor thin margins that will eventually drive the seller out of business. The hagglers also fail to mention that they won’t stay loyal to your business, they and their family stays loyal to whoever is willing to offer the lowest price of their next purchase.
    Why is it okay for the haggler to negotiate and low ball, but don’t lowball him when he is selling something? Suddenly, you are insulting him. How about relying on a handshake or the word of a haggler? How about business ethics? Ethics?? You’ve got to be kidding, ethics are a fantasy concept when all you care about is the cheapest price by any and all means necessary.
    It is ironic that these business practices are brought to us from the same region of the world that brought us the philosophy of Karma. Frankly, I don’t get it. Then again, I’m just a stupid WASP that has been successfully selling for a living for 17 years and apparently knows absolutely nothing about negotiating. I’m going to go enjoy a bottle of overpriced Heineken on my overpriced couch and watch the ball game on my overpriced flat screen that I bought in one hour instead of losing months of my life negotiating a savings of $50.

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  6. Wow, I’m truly amazed by this post. I always thought that a minor seduction would be used to bargain, but there isn’t exactly anything calculated with body language and what not. I like how this post cuts things into numbers. Great post Tim.

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  7. Actually, this is art made by us. You can set the numbers of any product. But you have to learn judging people first then start bargaining.

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  8. Where is the balance between using negotiating strategies to get a great deal and living with a win-win philosophy? And as entrepreneurs ourselves, to what extent should we really want a vendor to sacrifice his profit margin? Any thoughts on this, Tim?

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  9. I’ve worked in commissioned sales for over 12 years. I have no problem with negotiating, but Indian clientele will do very dishonest things to save money.

    For instance, changing price tags on items hoping we won’t notice. When we do notice they often try to cry out “false advertising!” (sorry, it’s not false advertising)

    When I worked in the furniture/mattress industry. They would come back months later trying to return a mattress thinking just because they left it in the plastic we wouldn’t suspect they’ve been sleeping on it anyway.

    Outright lying about a quote they got elsewhere thinking we’ll be gullible enough to take their word for it. (If the quote you got elsewhere was so great, what are you even doing here?)

    Most of the tricks in this article won’t work on a seasoned commissioned sales person.

    If we’re at the point of making no money off the sale, we have no problem letting the customer walk. Have we lost anything? Nope. The only thing giving in does is attracts more dead beat customers that you will make nothing off of. Nobody likes working for free.

    Often sales people will just downright refuse to even work with these types of people. Have we lost anything? Nope. I got to the point where if they asked for a discount I told them the price is on the tag, if they don’t like it they’re more than welcome to take their business elsewhere. Again, we haven’t lost a thing. Spending an hour haggling only to make $0 in commission isn’t worth our time.

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  10. I’ve found that knowing basics of a language (if you look like a foreigner/ tourist) and engaging in conversation in their mother tongue makes them happy and more likely to lower the price. :) I live in Nepal as a white person. We negotiate as much as Indians…

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  11. This is total rubbish. I am an Indian and I have never negotiated anything. I just pay what people ask if I want something. You can not speak for all Indians and their negotiating skills.

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    • Good. I hate people bargaining. And I hate those they try to lower the price and ask so many questions. At the end they did not buy because my price is firm.
      Waste of my time and energy. Sometimes I seriously do not want to do business with those who bargain.

      Like

  12. There is a saying in India (attributed to Marwaris, a business class people)

    You make profit when you buy – when you sell you are only recovering the cost.

    Think. :)

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  14. Well they simply pray on people emotional vulnerability and sometimes negotiated too much and loose deals :) All the better for smarter businesses :P

    Also greedy people are much more likely to be fooled look at Madof case :)

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  15. I like to buy most of my items from places like second hand stores, phish lots and festivals, flea markets and small family owned businesses and the like, so negotiating is always how i handle the situation…stores and businesses in the US are usually owned by higher ups who are nowhere to be found, and the people selling the item have no say in the matter, but ive found that when they do, they are usually looking to move as much product as possible, regardless of the price. when i buy used music from a record store i can usually pick up $50-100 of merch, and walk out with half of it for a quarter of the price by negotiating a dropping the prices of the expensive triple disc items, then dropping the single items i dont need or can find anywhere

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  16. I have a store and hate people bargaining. Seriously, if they are not serious, please save my time and energy. My store is a bargaining store. My price is half of what they can buy out there. Sometimes I dont want to be offensive but when I see the people bargaining, I want them to go off and not have a deal with them.

    Seriously, if it is like a hotmail deal or a vehicle or a house, I can see the value in bargaining. But if it is like vegetable, why put so much effort into a few dollars???

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  17. As an Indian, I can say that not everything in this post is true. Most items in India are fixed priced these days. You will have no scope for negotiation in a good indoor shop. Even if you do, you will make yourself seem like a beggar.

    Bargaining culture exists only in small shops and street shops. Besides, most Indians who bargain too much are lower middle class people.

    I personally avoid bargaining as far as possible, simply because I find it cheap and irritating. When I do sometimes, it is fun though. But again, most Indian street shopkeepers will ask for prices 5 times the original product price. So if you are on the streets messing around with those shops, go ahead and bargain. However, if you are in a reputable store, please behave and avoid bargaining. Everything has a limit, don’t be shameless.

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  18. I am Indian and the fact that people feel the need to negotiate is quite sad. It tells that people don’t trust each other and everyone is trying to rip off each other. When more people try to negotiate or bargain, there is lot of pressure on seller and it is more likely the seller is going to cheat and sell you a fake or overprice the item to begin with. In end no body really wins, but both parties lose time haggling and also health by exposing them to higher levels of stress.

    My strategy is simple if I like the price and product I buy it, else simply walk away without bargaining. This just requires one to research the product well and be a good judge of quality. With time you learn which businessmen are honest and they value you as a good customer and take good care of you. Therefore I also look for recommendations from friends and family members. It is also another common Indian trait, perhaps something worth more appreciation than the art of negotiation.

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  19. Hello

    I work for an educational publishing company based in the UK which publishes material for students of English as a Foreign Language. We are currently preparing a title for publication in spring next year, and our author would like to use extracts from this article to form a text to appear in one of the units. Can you let me know whether or not this would this be possible?

    Our text is 330 words long, most of which are directly quoted from the article, with some information omitted or reworded for ease of comprehension etc. as the intended readers are not native English speakers. There will be some comprehension questions about the passage and the language used. I would be happy to send you a copy of the text, and to provide a copy of the unit where this would appear if you wish.
    I would appreciate it if someone could email me about this to let me know how to proceed.

    Many thanks

    Rachel

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  20. I find it so hard to negotiate or haggle with people, I just suck at it…

    But I’ll try and take your advice on board, Indians are masters of the haggle.

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  21. I got so sick of this haggling that I will no longer give any discounts whatsoever when Indians start with this routine. It’s fine to ask once. When you hear the same damn question 10 times it gets old really quickly. You give me best price? You give me free delivery? No tax? I pay cash you give to me cheaper? I have friend who needs very much furniture, I tell him to come to your store. So now you give me best price??? Free delivery? No tax? Best price?

    It’s exhausting to the point where I no longer put up with it.

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  22. I believe that negotiating really doesn’t help us Indians.. as it is an utter waste of time… The westerners do it right… As they would just research the whole market and then look for the product with the right price, go and buy it. Doing so they, leave a tight noose around the neck of sellers, such that if they don’t correct their retail price they would defnitely end up on the wrong side, killing their own business and then themselves in the end.

    My call would be just to give your price for the product if the seller is not willing to give in leave it else buy it.

    I bet people from western countries know that what goes around comes around. So, they know in case to get the best of the quality they need to pay for it.
    This is the reson why they have high per capita income and better quality products.

    Moreover, Negotiating is really complex and depends on both buyers and sellers response to a deal. So if both quote the right price there wont be much of time wasted & the same time could be utilised to be more progressive and could be utilised on other important chores.

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  23. Ok thats fine and dandy and makes alot of sense when applied to Indians from India. What about the Indian fellow that has never been to India, and has been brought up in a westernized civilization. Whose father and grandfather were born out of India. . . Is he not blessed with these super powers of negotiation?
    Let us not forget our European counterparts, the portugese, the spanish and italian, who constantly strive for bargains and are allot more aggressive when doing so. The art of negotiation stems from a sufficiently accurate perception of human behavior and a complete understanding of business principles.

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  24. you mean “How to Haggle like a PITA”

    you should see how (most) transplanted Indians do the same “negotiation” in the west. It’s almost like they believe they can tire out the vendor into giving up and just give it to them. Check out Russel Peters comical interpretation.

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  25. Negotiating to the point that Indians do is not only wearing, but downright unnecessary.

    Learn to enjoy life instead of being trivial and a cheapskate. Indians should learn to be less irritating in general when it comes to money.

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