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.
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I am amazed at this blog. It is true that indians are excellent at negotiating. I think though at times negotiating every deal can wear on you physically and emotionally. But, as a whole these are some interesting observations you have pointed out. I liked the idea of buying dropping the last product at the end. I could this being very useful for businesses which are about to buy multiple cars/trucks at a time. I will try a lot these out next time I am in Cancun. These rules would seem to be very applicable to custom things like: wedding cakes, costumes, a home improvement company doing work on your house, and so forth. This blog alone is worth thousands. I can tell you from personal experience in owning a landscape and a concrete company, that this type of negotiating WOULD save you a ton!!!
Best
Jose Castro-Frenzel
Jose, there is something even more expensive than money or time.
Regardless someone buying from you or you buying from someone, when it gets to the point that you feel that an attempt is being made to cheat you, its better to thank them and leave. There are many more vendors or customers out there and this first one learned his lesson. he will be more considered from now on. Dishonesty toward me is a great insult
One of those customers was blaming on economy and weather in order to avoid paying for repair service already done, by me, at agreed price which was competitive, realistic and fair. I simply took the parts out , put the original damaged parts in and waved goodbye adding that I will not do any work for him at any price. Yes I lost time, but saved my dignity.
Cheat me once- shame on you, cheat me twice-shame on me. My pride is more valuable than his money. There are many good customers who need and value my services. No, I will not discriminate someone based on his race or cultural habits, but I will not permit myself to become a puppet either.
Let an Indian hire an Indian service and repair person. They will get along pretty fine ( LOL)
your right
dude here in india the vendor couldn’t care less if you walk out ,so there is no pride in doing so when it doesn’t matter to the other the other.Second thing is that the shopkeepers intentionally increase the price because they know we are gonna bargain anyway.So they have to secure there money we have to secure our’s there is no problem what so ever.
Much of what you post on this is true, but I would also add that much of Indian people’s entrepreneurial motivation is driven by an unleashed desire to makes lots of money and acquire the kinds of material, capitalistic wealth which was the province of Western Europe and America for the last few hundred years. That was already evidenced by the Japanese in the 70s and 80s, and recently by countries like S. Korea, China, and other sourtheast Asian countries. I’m sure the Eastern European countries will follow as well.
It’s what happens when you release repressed, pent up desire to acquire wealth.
In addition, your insights into the negotiations that go on between customers and merchants is something that was always part of Indian and Asian societies, and I believe much of Europe as well. My parents emigrated here from S. Korea and they thought it was unusual that American’s did not try and negotiate a better price for stuff they bought, likewise when my parents shopped in Korea town in LA, I wondered why they always tried to talk down a better price with the merchant.
This is strictly a cultural thing, and I don’t think it correlates to their recent successes in business.
-Don Kim
Completely agree with you Mr.Kim. I’m from India and have lived and worked in ASEAN and have travelled the region. Also I’ve had very limited exposure to East Asian community as well. As far as buying/bargaining is cocerned I’ve found the similarity in all these places. I’m sure even Europe should have been the same except that the current day society in Europe would have largely evolved-out of the bargain-buying habit. And as far as business negotiation goes, every successful (and sometimes not-so successful) businessman should be definitely having it in him irrespective of race, colour, creed or region. I guess the success of Indians (and other Asians) in the U.S Tech landscape has got more to do with the business environment in U.S (silicon vallye style enterpreneurism) and the fabled immigrant work ethic (coupled with the desire for the riches of the new world) rathen than the vegetable-buying negotiation skills.
The blog writer is a smart alec. He is trying to create a stereotype out of nothing to keep steady flow of traffic to his blog!!!
I don’t agree with you. Stereotype already exists. I am in sales and service business, and each time I have to deal with someone from region you mentioned I leave with bad taste in my mouth. Finally, after so many times of bad encounters I do state that I charge for my time for estimate. Usually phone gets hanged up on me, seldom a phone estimate is requested (to get something free anyway) . I ask for credit card number to charge them for phone estimate and then I get hanged up. In isolated cases only, after trying with so many businesses they call you and agree to sign a contract for order, and after work is completed they will tell you they have to do something for a few minutes and leave. After several calls to they will answer you they cant make it today. Then I remove parts I installed, put back old ones, leave a note with tenants that Landlord refuses to pay for repairs and leave. Where will the snowball roll from there is not my problem.
I must disagree with you again. Stereotype already exists.They do not try to get a better price. They try to cheat you.
I used to get annoyed by this, but now I employ a different strategy.
Price is given once! By me. No one puts a price on my work!
If the price ( competitive, fair and realistic) is not accepted, then I will not discount my own self , so NO DEAL! There are a lot of good customers needing my services and I am not entertaining someone who is trying hard to cheat me.
Don, American Commerce is designed to adjust itself, unlike other countries.
Why even bother? Before buying we all have an Idea of what is the average price for an Item, don’t we?
A peddler is not even entrepreneur. A single goal he has is to get as much for every single Item as he can.
A buyer is looking for a chance to get something for nothing ( buying $100 item for $30 insures him $70 for nothing. Buyer argues he put time in it and it is the value of his time. Seller also has invested equal amount of time and not gotten a penny for it, lost $70 and is upset. Which supplier will sell him $100 MSRV Item for $30? You can negotiate all you want, but he will only sell it for Cost + expenses + some profit. I don’t know how is it in India, but here in US obvious low price could mean trouble ( bootleg, stolen, refurbished, If we buy American, then our economy will bloom. We will have jobs, we will prosper. What is it that you can not find here in US that you must buy it in India or in China?
Those countries prosper on US Dollars not on Rupppies of Yuans.
Tim – I found a profile of you online on this beta site
http://www.findingdulcinea.com/features/multi-day/net-profiles/49-Tim-Ferriss.html
&119/ Just Found: 3 Cultures Compared…
Tim Ferris points us to a documentary by Bob Compton today, comparing 4 highschool years in the US, China, and India. Will the flat-world perception have effects on the education system in the US (and Europe!) comparable to the Sputnik……
I am wondering: Will the flat-world perception have effects on the education system in the US (and Europe!) comparable to the Sputnik shock 50 years ago? http://www.felgner.ch/2007/12/3_cultures_compared.html
The graphic on the 2 Million Minutes home page is gorgeous. Provocative, yes – the trailer alone got me shockingly stirred up.
I am still very conflicted about my own education. I was a poster-child for well-roundedness. I spent summers doing volunteer work, was a respectable athlete and musician, and scored a perfect 36 on my science ACT and a near-perfect in all other subjects.
Yet, somehow I more or less fell through the cracks in our collegiate education system. I continued to do well academically – but at the end of the day it really hasn’t served me or anyone else because I haven’t yet successfully made the transition from student to productive member of society through any existing channels.
I wonder how much non-academic skills like negotiating (perhaps learned in childhood as a regular part of life) are helping young Indians and Chinese make that transition. In my case, learning to negotiate really well could probably make up for having an art degree.
Actually, I have started learning through the Sandler Sales Institute. I recommend it for negotiations on this side of the ocean. http://www.sandler.com/
I am wondering: Will the flat-world perception have effects on the education system in the US (and Europe!) comparable to the Sputnik shock 50 years ago?
I’ve done this type of negotiating in Turkey for buying clothes and suprisingly, it can be a lot of fun. I often have to force myself not to smile or laugh when the sales person lowers his price once again. One of the best (i.e. time-saving) techniques is to just walk out of the store if you don’t like the price. Usually they’ll shout the best price they can give you when you have left the store and then you can re-enter and say, “Now we’re talking”.
I think the entrepreneurial Indians are the exception. Indians, in general, are extremely conservative, cautious and rigid when it comes to following policies, rules, and laws. These kinds of attitudes don’t really foster an entrepreneurial spirit.
I also agree with Jose Castro-Frenzel that I’d rather pay the inflated fare than enter a negotiation to save a few bucks, except for when I’m in the mood for fooling around…
Well timed for me — I’m heading to India in two weeks. So, thanks!
But a question: Isn’t there room for win/win negotiating?
On a recent trip to West Africa, I became frustrated with traveling companions who would tease others for “paying too much.” I’m not sure I agree with Tim’s assertion that the true price (or value) is what you pay. If the dude will accept as low as $1 for an item, and I want it for less than $5 and end up paying $3, I don’t see that as a losing situation for me. Especially in parts of the world where $1 means a hell of a lot more to them than it does to me, I’m glad to get a good deal that isn’t necessarily the rock-bottom price the vendor would accept.
It’s the win/lose approach to negotiating that sets us up for disappointment. At least that’s what I think — of course, that may be why I’m a church worker and not a world-famous entrepreneur.
Very Insightfull
I completely agree Scott – I have recently started a new business here in America where I have been dealing with a lot of Indians – after dealing with their negotiations for the past few months I have found myself on the losing end to the point where my business is not making a profit from there business. I already offer a great service at a good price – from here on out – I will only take win-win deals. I now have a zero tolerance attitude towards their negotiations. Losing their business is better then losing my $.
I got a huge insight into bargaining when I was in an Arab market in Israel. My bf and I were walking through and two American girls were trying to buy something. The vendor named a price and they paid. The vendor said to my bf in Arabic with regard to the girl, “Stupid idiots, they insult me by not bargaining”. He was absolutely disgusted by the transaction despite getting more money than he would have.
The concept of the fixed price was invented by the Quakers. They believed in not lying, so when they asked you the price, they told you. This turned a skilled activity into an unskilled activity that even children can do. This is the effect of technology.
The best thing to do in negotiations is to engage emotions of the vendor. If one makes/lets him be more engaged than we are, it is us who make the decisions 🙂 Pricing decisions included!
My husband is Indian and I have been watching him do this for years! In fact we just got back from India after doing all kinds of shopping (half the time I got left outside because the price would at least double just because I was in the room!) and is really fun to watch them all in action.
The funniest part is how his brothers think he’s a terrible negotiator! But in America he is amazing – he is running his own restaurant and has been profiting almost from the start mainly because he is a master of negotiation and numbers in general. He is my hero! Because of him I have negotiated all kinds of stuff we normally wouldn’t think to do.
The silence trick is the one I see the most and was the most puzzling until I learned it. It takes the emotion out of the transaction. I also learned to walk away – once they invest the time they will chase you down if they are serious about making the sale. We got $6,000 off the bluebook (not sticker!) price of my car that way!
In a way I am biased, but I do like how Indians do business – there is just more human interaction and both sides in the best of deals walk away happy. And you get hot chai!
It’s best to negotiate when you have nothing to lose. It’s easier to do this as a 3rd party in my career. Much more difficult in my personal life where I can get obsessive or attached to products. Due to personal goals I’ve put myself on a budget over the last year. Which means that if it’s not in the budget I won’t buy it. My normal shopping style is to look and know about everything before making my decision. (Well, this shopping style is worse on a budget!) If the price is too high. I literally won’t buy it. If it’s too expensive I end up staring at the item before I leave. Then that’s when the reductions start happening. It shocks me since I have not intended to buy the item nor have I asked for the reductions. This is a great skill to have. In your example buying these types of products can take a few hours to maybe a few days.
However, I wonder how much it varies when dealing with larger entities over longer periods of time.
I recently met a venture capitalist Christine Comaford-Lynch. She talked about negotiating for months or even a year on some projects. One of the projects was with a larger corporation like Microsoft involving millions$$$. Do you have any personal knowledge or industry knowledge on long term corporate negotiations?
Best Wishes, Kristine 🙂
As I’m reading this, I can see myself totally messing up the first couple times. This seems like a great way to get out of your comfort zone if something like this scares you. Also, keep that poker face and not getting emotionally attached seems like a key. If you’re one of those smiley, “nice” people all the time they’ll stomp all over you! After reading your book, Tim, I can tell your amazing negotiation skills have catapulted your success. I’ll make a commitment to get over some “negotiation fear” and f-ing go for it 😉 Thanks!
My tip would be don’t be afraid to walk away in these smaller negotiations. Sometimes you showing the willingness to walk away will get the salesman to lower the price drastically.
Hee, hee… that was so fun (and true). I travel to China regularly and can attest that some of that info would be quite useful when bargaining there. I used to think I was pretty hot stuff because I would counteroffer something like 30% less than the initial offer. Boy was I wrong! Now I start at about Rule #2’s 70% off.
One rule I would add is don’t be afraid to walk away. Turning your back on a deal that you just can’t quite get sealed will get you a quick “Hao de, hao de” (ok, ok) most of the time and if it doesn’t, well you’ve just found the basement and now you’ll be better prepared to negotiate with the next vendor. Remember, try not to leave money on the table!
In my wife’s hometown of Hangzhou, they have a saying about selling to foreign tourists: “Sha Zhu” (? ?). It means Slaughter the Pig and refers to how lucrative selling to foreigners can be. If you don’t want to be the fat pig being led to the slaughter, follow Tim’s steps (and don’t be shy… it IS tough for many of us Westerners to not get intimidated or angry with bargaining but you just have to go with the flow… trust me, the locals will respect you more for it).
p.s. check out comedian Russell Peters’ hilarious take on this with his sketch “Indian versus Chinese” http://youtube.com/watch?v=ZtbyVFLl_7U
Hee, hee… that was so fun (and true). I travel to China regularly and can attest that some of that info would be quite useful when bargaining there. I used to think I was pretty hot stuff because I would counteroffer something like 30% less than the initial offer. Boy was I wrong! Now I start at about Rule #2’s 70% off.
One rule I would add is don’t be afraid to walk away. Turning your back on a deal that you just can’t quite get sealed will get you a quick “Hao de, hao de” (ok, ok) most of the time and if it doesn’t, well you’ve just found the basement and now you’ll be better prepared to negotiate with the next vendor. Remember, try not to leave money on the table!
In my wife’s hometown of Hangzhou, they have a saying about selling to foreign tourists: “Sha Zhu”. It means Slaughter the Pig and refers to how lucrative selling to foreigners can be. If you don’t want to be the fat pig being led to the slaughter, follow Tim’s steps (and don’t be shy… it IS tough for many of us Westerners to not get intimidated or angry with bargaining but you just have to go with the flow… trust me, the locals will respect you more for it).
p.s. check out comedian Russell Peters’ hilarious take on this with his sketch “Indian versus Chinese” http://youtube.com/watch?v=ZtbyVFLl_7U
In my experience, I’ve found no matter what culture you’re dealing with, NEVER be afraid to walk out. Otherwise smile, be polite, and haggle for what you want to pay. The salesperson will never let the item go out the door without making a profit.
Probably one of the most influential books I’ve read on negotiation is Influence by Robert B. Cialdini. Everyone should pick up a copy.
Tim,
I don’t know if you’ve read this article:
http://www.esquire.com/features/money/ESQ0205NEGO_114_1?src=digg
This esquire writer spent three months trying to haggle everything he paid for (in America), starting with the price of a hot dog from a street vendor. Reminded me very much of an AJ Jacobs-esque experiment in lifestyle design.
Tom
You can do a lot of this in the U.S. and not just when it comes time to buy a car or a house. I’ve successfully negotiated down the price on electronics. The key is to get to a manager that has some authority. You’ll then need to give him valid excuses to cut the price. Price matching is a big one. Make sure to point out any flaws (clamshelled / shrinkwrapped products are tough). Whatever you’re looking at is never quite what you wanted anyways — you wanted one in purple without the accessory package.
No means yes.
I would reiterate what someone else said. When I was with my ex-wife traveling in Mexico, I would sit outside when she negotiated prices for hotels. They were really motels but motels mean something different there, as in they charge by the hour.
When we visited the Pyramids it was amazing that as soon as she walked up to me, the vendor would say, “oh, you speak spanish?” and then cut the price immediately.
An interesting psychological thing they did is that they would say something cost “$1 Maya.” Which would make you think, “Holy crap this is cheap. I am going to buy it.” Then you asked how much that was for American money. $20 was the first reply. But you were already invested and had emotionally bought it. Then you think that $20 isn’t a bad price. Clever. With the following vendors I found that $1 Maya was $5-$25. Very clever.
Contrary to this belief, not all Indian companies negotiate. given the americanization of our ways, most indian companies have started giving out fixed pricing and non-negotiable rates. We have since the begining followed this practice (year 2000) and only offered a published tiered discount on volumes (payment upfront). I believe the Indian Haggling was based on the fact that volumes of sales in India were very low. Given the vol increase in sales accross all industried, this trend is in reversal.
I do this at times when I shop for certain items. Ironically, the businesses I frequent are owned by Indian folk, but the sales persons are Mexican. I can schmooze my way with the Mexicans (yo hablo Espanol), but if he doesn’t accept my offer, the South Asian fellow is next to be bargained with. I usually do it this way, a much more streamlined/efficient approach.
Me: How much?
Owner: 100$
Me: I’ll give you 40$
Owner: No way!
Me: Thanks for your time, bye.
Owner: Wait! Okay.
I live in Los Angeles, I hit the Downtown fashion district, and it’s bartersville central.
Although, if I know that I’m going to pop a vessel in exchange for a mediocre deal, I’ll pass altogether.
I buy 99% of my stuff online anyway.
Gerardo,
Interesting Post! I have done the same in Soho, I think like anything else if you just get one good idea from the whole blog it was more than worth while.
Best
Jose Castro-Frenzel
I’m Indian and while I’ve negotiated everything from carrots to carpets, I think walking away is fine as long as you don’t really want the product. What if you walk away from a vendor hoping to be called back and he doesn’t come after you? Would you want to go back and see the smirk on his face?
Lastly, I agree with Scott, negotiating upto a certain point is alright, but if you’re happy with the price, why negotiate on a few dollars which could mean a better education or life for the vendor or his family? You can buy a meal in India for less than a dollar so it goes a long way.
I do this all the time with significant purchases… like my car, I got for less than 50% of the original asking price.. paying in cash helps too.
– paul
[…] Escape 9-5, Live Anywhere, and Join the New Rich. Yesterday he had an article titled: “How to Negotiate like an Indian — 7 Rules” in which he discusses how to ensure that you are always getting the best […]
Tim – I’d love to hear your thoughts on this “negotiating” topic from two different perspectives: the value of your *time* and being on the *seller* end of the transaction.
Regarding the value of time…If by negotiating I can save hundreds of dollars or more, it’s probably worth the investment of some time. But I can’t imagine spending 15 minutes negotiating the price of a candy bar. My time is much more valuable than that. Your blog post seems to imply that anyone who doesn’t negotiate *everything* is “leaving money on the table”.
Regarding the seller side of the transaction…Let’s say you’re Tim Ferriss and you’re shopping a follow up book to The 4HWW to publishers. How would you feel, and how would you react, if they offered 70% *less* than you were looking for?
Finally, this whole “be willing to walk away” concept is good, but only for (IMHO) large purchases for which you feel no urgency. If I’ve already spent half a day schlepping around looking for, say, a $75 DVD player, does it really make sense for me to continually “walk away” if a retailer won’t knock 50-70% off the price?
I’m not trying to sound contrary here, just challenging some notions and looking at it from different angles.
Keep up the great work and thought-provoking blog posts. (BTW, I’m not quite living the 4HWW yet, but I’m probably around the “8HWW”.)
It’s difficult to haggle with the major chains in the U.S. I worked at a major electronics retailer once, and had a guy come in and try to negotiate a price down on a handheld recorder. We had no room to negotiate. The price was the price. When I wouldn’t drop the price he says, “I can just as easily go buy this at Radio Shack.” All I could tell him was, “OK, go ahead…” He bought it.
However, some retail chains are prepared to haggle. Don’t walk out of a jewelry store without a minimum of 10% off – any of them have authorization to do that much. 20% is achievable most of the time. Go in the last weekend of the month because the sales managers are trying to hit quotas. The last weekend of January is especially good, because they’re both desperate to meet quotas and desperate to clear inventory so they don’t have to pay taxes on it. I did this for my wife’s engagement ring and got 35% off.
This is a great post though. I’ll definitely start implementing some of these techniques that I haven’t been using.
What you say about negotiating in india is true. It is the way of life, but i dont think it would help in entrepreneurial skills in west where the operating conditions are different, it is more of proving yourself and earning money that drives indians in US. As somebody commented above pentup desires finding an enriching atmosphere.
And the fact that almost all of the indians who come to US are the cream of educated indians [Remember the Asok of IIT Fame in Dilbert] might be a reason for their success..
But the fact is negotiation skills sure help you in any situation..!!
[from an indian]
I am disgusted by Indian culture (in Canada) because of their last minute negotiating. I would show up to install something with the price agreed by phone, then after the installation, they’d try to haggle. It’s like their word means nothing at all.
It’s interesting to compare the methods that work in North America compared to India. I’ve bought over $1M in advertising here, over the years. I routinely pay 20-50% of rate card (50-80%off).
In my youth I’d buy and sell cars in the same city, using the same classifieds, not even fixing the car, just writing a better ad and being better at selling.
Here’s my car buying tips:
don’t insult the car or find flaws. If you do, the owner simply waits for another buyer who doesn’t notice these flaws and is right to assume they will pay more. Do the opposite. Gush over the color, and even mention a fault but say it doesn’t bother you (“rust, I love rust!) Now the seller thinks you are the ideal buyer and even if you offer a low price, they will believe that you represent the person willing to pay the most.
I can’t wait to watch 2mm – I just ordered it! Thanks again Tim for bringing us such a cool variety of stuff! you truly ROCK! –and re Indian culture, since I’ve learned the roots of it, it just makes sense now, but at the time…
My top tips are:
1. Read and track the emotional state of the other party. Don´t pay so much attention to the words spoken.
2. Before you begin – know your exit and stick to it. i.e. the max. buy price vs. when to walk away.
3. Never feel that you have to do the deal. Avoid this by having multiple alternatives.
Another great blog post Tim. Keep up the good work!
Tim,
While this approach works, and I would say I even used it at times as a customer… It does not necessarily work long term with the same vendor.
I myself sold to such indian people, and other heavy bargaining type of people.
At the end, I gave up an item at a high discount… not that I felt I had invested a lot of time in the transaction… but simply out of goodwill for potential future business. At the same time, I did say to the buyer… that I did it out of goodwill… and that the price was exceptional, to welcome it as a one-time gift.
Next time around, he came about with the same strategy. I think he missed the opportunity to understand the spirit of our first meeting.
I gave him an excellent price right off the bat but say, really, we both don’t have the time (money) to spent hours discussing the price (back to your 80% effort for only 20%). And I didn’t bulge and let him go.
While people like that can work it a few time with the same people, that strategy will not work with the same buyers in the long run. (unless they really have time to waste, but do we?)
BE READY TO WALK AWAY. That’s something I learned growing up in the Phillipines and tugging along in the open market place. Ask for price, counter with the lowest imaginable price possible possible (depending on what item it is), sometimes the seller will shake their head or say no- just be cool and ask for the price of something else. Keep doing this for maybe 3-5 items. Don’t walk away. After all that time spent, the seller would at least want you to buy one, so they’ll offer a lower price. Then go back to your original price except add 10% or so to it.
Eventually you meet in the middle.
I use them in Tijuana and garage sales, both of which I’ll go to only if I really, really need something. Because now, I’m too busy time is money. I’ve been reading 4HWW and I’m trying seriously to unclutter.
There’s something about negotiating for a lower price. But do I really need more crap in my life?
Thanks for the tips Tim. Someday I’ll be able to go to India.
Darn… how did that turn out like that. I meant… then Walk AwAy (on that sentence that says Don’t Walk Away). that’s a hurry problem when I try to read my email subscriptions during lunch.
Jose Castro-Frenzel,
Thanks dude, yeah, as someone else mentioned–TIME IS MONEY! I don’t have time to haggle. Not for small time items, anyway.
I would like all Asian Indians (and everyone else) reading this to know that, *stereotypically*, they tip, as in restaurants, awefully!
Get this: in America, 10% just doesn’t cut it! 15% is your *standard* (provided that service was *adequate*) and nowadays 18 to 20% is best.
There aint no negotiating a tip for adequate service. Paying 10% is just getting you a *bad* reputation that bites you back eventually, one way or the other.
“Give, and ye shall receive”
Yes, you are quite right. They certainly know how to negotiate. I should know.. I have a few indian friends.
That aside, great tips! Now we really know how to drive a hard bargain.
Wow. And I thought my ethnic group (the Chinese) were hard negotiators. We may have just met our equal, so to speak. I have always been fascinated with India and its culture. Thanks for giving us a glimpse into their world and culture, specifically their negotiating style.
I’ve visited india several times.
Most products in India come with MRP(maximum retail price) and no retailer is allowed by the government to sell a product more than that price. Just like here, it is not possible to negotiate in departmental stores in India.
However, there are some unregulated commodities and owner run businesses (small and large), that are easy to negotiate because there prices are always by the mouth(not printed).
The best method I’ve found shopping in India like leather is to go to a store that actually has price tags on each item and leave the store and then you have to check with a few other stores close by which have price tags and then you must negotiate a little, if they are used to negotiation they’ll usually go down on price and you know the price is inflated. If they are firm and you’ve already compared the price of the item with few other stores you know you’re getting your money’s worth.
It is mainly the immigrant Indians that are very successful in their entrepreneurial skills.
Because running a business in India and being successful there is like the next to impossible and if they and they’re family has business background in India, it’s really a piece of cake for them to start businesses and be successful in the US. With the huge population in India, they know exactly how to handle competition and still be able to survive without all this copyrights and patents. Above all, India has been historically a country of highly educated people mostly engineers, doctors, lawyers and recently businessmen.
At the end of the day, your ability to negotiate is directly proportional with how badly the seller needs to make the sale.
That is why people are advised to go to car dealerships during month end, when sales people need to make their numbers.
Negotiating only works in cases where as someone else pointed out, the sales are low. Go to a BMW dealership that is severely backordered and try to negotiate a price and you won’t get anything off.
Or take Apple as another example, they rarely run discounts/promotions. Premium products where there is high demand, or where the seller does not need the sale badly trumps haggling.
Hey Tim, thanks for being an inspiration, and your blogs are very helpful too!
I have a question now about my income auto-pilot…I put together a website as a business venture of mine, but I’m a little disappointed that my conversions are still at 0. I only put it up two days ago, so maybe I’m being a little naive. I’ve gotten 110 hits already! Still, no one’s bought anything.
Is there a way to make the website more attractive to potential buyers, a first time visit resulting in conversion? I know you’re a bit busy, but I appreciate any help I can get, just as you helped some of your students increase their profit in 3-6 months (from 4HHW). 🙂
###
Hi Angelo,
I’d love to help, but I just get too many requests. The best place to get help from people who are doing it is in the reader-only forums on the main http://www.fourhourworkweek.com site. The Ning.com “4hww” groups could also help.
Good luck!
Tim
I think Indians are really nice people with a business brain.
[…] Ferriss, the author of The Four-Hour Workweek, has a post on his blog that addresses the difference. He quotes Bob Compton, the executive producer of the education […]
Where I work we don’t hire foreigners, so I’m not too worried. Oh and i’ve learned a million times more after high school and college, so this documentary does not appeal to me.
[…] How To Negotiate Like An Indian – I’m not the best haggler the world has ever seen, normally I’m the good cop to the husband’s bad (unless we’re dealing with immigration droids of any stripe, then I get to be bad cop). This was interesting. […]
Tim, your blog comes in at #43 of the 53 Top Blog Designs of 2007.
http://www.adii.co.za/2007/12/10/my-53-top-blog-designs-of-2007/
[…] Feriss has seven rules for negotiating like an Indian. He admits he is stereotyping all Indians as excellent negotiators, but he thinks this is accurate. […]
HI,
The one thing that i learnt in last 26 yr of existence in India is that first thing you know is “Everything is negotiable”. From Grade in school to extra scoop of chocalte at home. Love with girl frien or morals in the society (politics). Price is all what we can bargain.
Extreme But be in India to learn allabout this
Thanks Sam, but I feel much better here in US
Hey Tim,
today I followed you tips and negotiated like an indian at the local market.
I got a jethro tull vinyl for half the price!!!
Thank you!
Hahaha. Guess who won. Hilarious! At first I couldn’t make out from the photo. I thought an Indian won but none of the guys in the photos looked Indian. But ultimately the shopkeeper won, again LOL.
By the way I can’t negotiate even as an Indian! I am uneasy doing it. Maybe because I am kind of introverted. So I thought let’s learn from your blog how to negotiate like an Indian. But it seems too much work to negotiate 😛
This is why Indians dislike Israeli travelers so much. They have finally met their match!
lol
[…] a link to an amusing and China-relevant (amusing in its China-relevance, really) blog post titled How to Negotiate Like an Indian. Here’s an excerpt below (the excerpt is followed in the post by a list of tips.) In India, […]
[…] am sure you have all read this one by now – How to Negotiate like an Indian — 7 Rules – Anything you found prticularly fascinating? Like this line for instance? Hotmail founder Sabeer […]
Hey add this one to your list –
Rule 8 : Walk slowly away from the place as if you have decided you have wasted enough time in conversation… This sometimes does work… 😀 [and sometimes fails miserably]
Lots of streotypes …… Every Indian carries a pen and paper and writes on paper when negotiation gets hot …. what the heck ….. i am a 21 yr old indian and have never seen this ….. the writer probably went to only one shop …. negotiated a litle and made up the rest of the story ….
[…] How to Negotiate like an Indian — 7 Rules | The Blog of Author Tim Ferriss some interesting ideas on underpinnings for the Indian entrepreneurial spirit. (tags: India economy) […]
yes, but….the Hindu hierarchical influence, the British reinforcement of class still make the average Indian somewhat war, even contemptuous of business folks..bright Indians want to go to engineering schools, get technical jobs with Infosys – only a small percentage want to become entrepreneurs. So, yes, they may negotiate for the day to day stuff, but not sure most would enjoy doing it for a living…or at least I hope not…
since I help CIOs negotiate technology contracts and hope the whole nation does not decide to move in to my profession -)
First off, I found both the article and the comments very interesting. Thanks.
So, I tend to agree that negotiating is important, but.. really, there is a time when it takes AWAY from the opportunity I think. For example, negotiating very hard, especially with someone that has other ops for a sale, can come back to bite you. Also, people can learn to come into a negotiation with you very defensively.
There’s pros and cons here I think.
—
Dustin Puryear
There is only one truth about India and that is: “For every statement that you make to qualify an Indian or India, the opposite also holds true”.
India is such a complex cultural/social web that it is hard to state one fact and not contradict it in the next moment. For every cow that roams on the street, there is a car being driven out of a car-dealership and for every female infaticide, a girl is topping state level examinations.
So soak India in for as long as you can and just enjoy it, I know I am and countless others have for the last 5000 years:)
Please, do not make it look like its a chaos in India.
Few millions of middle and upper class people are not even a percentage of over a billion population of India. 5000 years ago was as it is even now in most of the country. Same thing in China. Yes, American Dollar may have been shipped there, but civilization there is still Third World and will remain for another 5000 years ( minimum).
[…] an excellent explanation of what these rules means, please read How to Negotiate like an Indian by Tim Ferris. I am sure you will enjoy your forthcoming souq trip a lot more if you keep these […]
I agree with the first rule, but I have to admit that the statement “here are no suggested retail prices in India. Nothing is labeled…” is not true. I’ve stayed around 70days in Bangalore and I have a good example of one sort of biscuits that I brought with 12Rs from anywhere. They actually had the price printed on the package and it was the same selling price regardless the location they were selling the merchendise(not only biscuits, I have more examples). I agree totally with you if you are reffering to the “free market” and maybe other things.
Indeed, they are good in negociating but just because they are trying. They are trying to rip you off without being “violent” or something. I liked that, and many times I rewarded the autodrivers which were trying different strategies to get some 10 or 20Rs from you. Still, I admired that no one was upset if you don’t allow them to get more.
One explanation I got from one guy from India, it was that all indians which are trying to get more from you(as a foreigner) they are doing this just because you have anyway more that they have meaning you can affort to pay more. This was an absurd logic at the beginning, at least for me, but when I was thinking again and 10 or 20Rs it is indeed less. Sometimes with these 10Rs I buy creativity in negociation which I did not saw in other places.
I also manage to have some experiences in the street, buying a lot of stuff from people on the streets. The above rules were applying here. The guys are “trying” to sell you stuff with a very high price at the beginning, in some cases 5-8 times more that the price you pay at the end.
Anyway, the stories are a lot..just wanted to share some toughts…
My business partner is Indian and it was his demonstration of negotiating skills for a deal I was trying to make that got me to offer him partnership. It may be a stereotype or something cynical like that but it is a damn good one and is something to be proud of.
Great information within on how silence can be your best friend. If someone is still talking during the transaction, it’s usually the immature buyer who is talking themselves out of a lower price. Keep quiet and let mother nature’s stress response do her bidding for you!
Happy new year!
[…] How to Negotiate Like an India – 7 Rules. Is Tim Ferriss Stereotyping? Maybe. Something I pride people from India on? Definitely. […]
Hi Tim,
I received your book yesterday afternoon and have read it through completely already and am on my second reading. Although it’s been brought to my attention before, just a few days ago actually, it just hit me that, yes, I want the lifestyle that money can buy, not necessarily the money itself. And I definitely don’t want to wait any longer to have it. Thanks for writing this book and showing people how it can be done.
Deanna
[…] how much you will enjoy living there. This is an idea that I found in the comment section on Tim Ferrisss Site that could be used in house negotiations. Car Buying Tips: Don’t insult the car or find flaws. If […]
Nice, I’m Indian and i was in India from December ’07 til Feb ’08 mostly on my own doing an internship through my university (UWS) and yes! i negotiated for everything. Accomodation, clothes, taxi fares everything. Its a lot of fun.
Best negotiations of the trip, 50% off everything i bought at a levi’s shop when a 30% off was applicable, a bamboo hut with tiled roof on a hill facing a private beach came down substantially as did all the ‘hotels’ i stayed in when bus-ing around the south side usually as much as 50% off the normal price, all the souveneirs i bought were negotiated for.
Its nice to be back in Australia but missing the whole geo-arbitrage factor
Anyone wanting to do a mini retirement to India (south) contact me =]
Indians may think they know how to negotiate. However, they turn Americans off by their perpetual need for a deal. Consequently, they give their people and their culture a bad reputation.
I Can’t agree more. In business dealings this only works for a short time.
I’ve been in sales long enough to know how much I hate this type of clients.
And a little off topic but from my personal experience,
many Indian guys have hard time dating because they’re known to be cheap, skinky, hairy and disrespectful towards women. They can’t switch off their habit for too long.
The only indian guy who didn’t fit this description was born and raised in london.
oops tyiping error ‘stinky’
Positive as well as negative..I have worked in retail for many years and one of my largest set of clients are Indian. On one level…I have come to appreciate their art of successfully negotiating down price and how they simply do not get emotional in the act of negotiating…however….for those many employees/salespeople who work in retail, etc. in America who support their families and do not set the retail prices of the products…they can be (hands-down!) one of the most disliked customers walking in..I simply cringe because I feel my time is also valuable and I do my best to find my customer the best possible product and value for one’s needs and the last thing I want to do is negotiate with every single Indian customer that walks into my store on every possible detail for hours. It gets insulting from the perspective of the employee…like one observer commented previously..you may show a sign of gratitude by offering a discount, but Indians do not know when to draw the line…you have to give them credit..they can wear you down mentally..however..in many retail industries in the United States…you ask anyone..they will never win a popularity contest as most appreciated type of customer..but the beauty of it from their end is..they don’t care…there’s something to be said about that…
Hmmm….is it any wonder that the average Asian-American makes about twice as much money as the average caucasian American? I think not…
Hi Tim – Great blog on negotiations. A helpful hint to homeowners looking to get a home improvement — never ask your salesman “Is that the BEST you can do?”. Either he will answer “Yes” at which point you (the American consumer who is not generally comfortable negotiating to begin with) lose tactical positioning. In essence, you took the flexibility away from the salesperson. If he lowers it after saying he couldn’t, he’s a liar… and he doesn’t want to be labeled that way so many times he is handcuffed into holding his price.
If he does offer you a way to lower the price, he controls the price point while still allowing the homeowner to “win”. Case in point, old school sales training suggested that while you are calculating the price, if it ends up being $4078… ignore it and offer it for $3,995. The thought process is that people round down in their internal thought process — even though both prices are essentially $4,000, in one example you are thinking 3-something and in the other you are thinking 4-something.
A more sophisticated sales strategy is intentionally making the original price something on the “wrong end” like $4,078. A lot of homeowners will say, “Make is $4,000 even and we’ll do it!” In other words, the homeowner wins the $78 battle, but the salesperson wins the $4,000 war. The salesperson might have been able to drop another 20% if the homeowner understood how to properly negotiate.
Bottom line, don’t ever ask a salesperson “Is that is the best you can do?”
If you learn how to properly negotiate, you can save thousands on every major home improvement. Check out my website for more tips specific to home improvement negotiations.
Wow, so glad I stumbled upon this. First of all, Timothy Ferris has been my hero and mentor for a year now. Reading his book has inspired me to go through with my dream of starting a business venture. It’s this venture that has me negotiating with an Indian company for an e-commerce site. I knew that Indians liked to bargain and negotiate, but I didn’t know how much. I was just about to sign a contract when they tried to change the price. I’m going to stick to my guns on the price. Glad I found this. Timothy is awesome.
To be quite frank, this form of negotiating makes one look like a low class beggar in the USA, it simply doesn’t make you look good.
Our store has set prices we charge everyone. We do not hawk customers by calculating how much extra we think we can charge them, and keep prices fair for all.
Recently however, It’s been our experience that the Indians, Jews, and Iranians who frequent our shop in downtown Los Angeles, coming with these “negotiating skills” speak extremely rude, are obnoxious, and I have been forced to automatically charge them an extra 20% extra. I then, give them a discount of 20% (the price that everyone else pays ), and completely ignore them after saying “Take it or Leave it.”
Now some of you may think how rude, racist, and crude.
No, You have yet to experience how unruly some of these customers can get.
Take these negotiating skills and look like a complete jackass if you wish.
I agree with you on every count.
I really wonder whether you are talking of the India as it is now. Now a days you can see lot of retail revolution where shops are compartmentalized and people get billed at a billing counter. However, this is not true everywhere still there are shops where you can negotiate but commodities sold in those shop are limited.
Tim,
Being an Indian, I agree with most of the post. For buying vegetables, clothes, furniture and day to-day things, this is very true. However saying “There are no suggested retail prices in India. Nothing is labeled, so it pays to talk with several vendors before making a significant purchase.” would be exaggeration. Not all things can be negotiated, if you go to a grocery store and start negotiating on the price of cookies, you will be kicked out. There is a “maximum retail price” which is usually considered THE price of grocery items.
Overall, you pointed some really good points. I did not notice some of them before reading the article, however I used them subconsciously. Great Observation! Tim.
I am an Indian and I think this article, while it reads nicely and holds some truth, is exaggerated. There are several things one can negotiate the price of in India, but there are also prices that you cannot negotiate, including restaurant bills and metered cabs. There are also lots of shops (the numbers of such shops in cities is increasing) where you cannot negotiate the price of any item. It is also incorrect to say that there is no suggested retail price in India or that there are no labels. The “MRP” listed on items (by the manufacturer) is the maximum retail price and shops usually sell items at that price. On the contrary, I have seen in a few other countries that there is no MRP printed on products by the manufacturers and shops stick their own price labels on. It becomes more relevant to compare prices across shops in such cases than in India.
As an owner of a company, I find it very frustrating to work with Indians. They always want to bargain the price down down down. I had to stop taking jobs from them because I would lose more money sittin there barganing with them than I would make on the job anyway. Stop being so cheap.
It’s probably only worth negotiating on big-ticket items; I wouldn’t waste my time negotiating on a $10 item.
But I can just imagine sipping chai with the store owner and talking first, building a relationship. That’s a skill — soft skills are still skills — we’ve lost in the West.
[…] How To Negotiate Like an Indian […]
The thing that works for me is; when i quote a price which the vendor really doesnt seem to be too pleased with and says no; i simply walk away; and 9 times out of ten I have them eating out of my hand; coz he calls me back and agrees!! U should see their faces!! They literally shove the purchase at me; and i can hear them saying in their minds “up urs!!”
[…] second point. Hmm. Thought-provoking indeed. For another view on the same issue, read Tim Ferriss here. Posted by thecuriouswavelength Filed in Uncategorized No Comments […]
The title of this blog post reminds me of a title of a chapter in Ramit Sethi’s personal finance book “I Will Teach You To Be Rich”, have you read it Tim?
Agree that win/win trumps win/lose, but if you are haggling with an individual with a mindset otherwise, then you cant make the rules. To this person, the price is not right until he leaves the negotiation with more than you.
Exactly. The emotion is why the indian out-negotiates with the American. The process simply fatigues the American negotiator who is uncomfortable with the conflict.
i’ve just spent two months in Palolem, Goa, India – I must say that the endless sales pressure and the inevitable haggling got too tiresome and boring for me – I’m quite good at it but chose to avoid buying anything that wasn’t essential until I was getting ready to go home and had learned what prices were reasonable. Begging is the other aspect – an emotional sales pitch that appeals to one’s compassion, milking it for what it’s worth.
Surely this passion for bargaining isn’t always productive – I know I’d rather deal with someone who’s reasonable and isn’t always looking for ways to screw me over. Can’t that energy be better spent on something productive?
As for the person saying there is an opposite for every aspect of indian life – and giving the example of successful indian women in important positions somehow outweighing the practice of aborting female fetuses – well, on the beach in Palolem there was already an extreme imbalance in terms of men vs women – most of the European women I spoke to complained about Indian men constantly harassing them, staring, groping and offering money for sex. all the staff in all the restaurants were male, the only Indian women you’d see were either begging with their babies or trying to sell you something. So there will be even MORE indian men because of the practice of aborting female fetuses? What consequences is that going to have?
[…] a coupon or through negotiation, the list price is just where the game starts. Read the rules of what makes Indians successful negotiators and try to remember them. Rule #2 is my favorite – “Try for 70% off — Don’t accept […]
I sell TVs on commission at a retail store. We can’t change prices but Indian people think we are lying to them when they try to haggle with us. I would rather lose a commision sale then please some of them. They don’t give up even after I tell them the truth. They never win with me.
[…] outside money, in order that they learn to make money quickly. Tim Ferris would probably agree that negotiating can be practiced and Seth Godin would certainly agree that selling takes […]
[…] Experiments in Lifestyle Design: How to negotiate like an Indian […]
I’m an Indian and I am absolutely shocking at negotiating. I’ve made some blunders in my time.
I may be missing the point, but it seems as if the article is based strictly on a win-lose model. Negotiating a great deal can be win-win and it’s sad to see this article take such a negative approach.
That said, the Indians I have met certainly live up to the hard-bargain-at-all-costs model. In addition a majority of them were rude, insulting, and unwilling to listen to the other side. I’ve personally booted hundreds of them out of my store for such bad behaviour and my business has yet to suffer from it.
Its about cultures, the negotiation culture is a part of India and no one minds it within India (I don’t know if this culture was developed after British made India poor or it was already there). However, as a habit Indians do the same in America.
Probably this can be taught by Indian government to all US immigrants (anyone seen the movie Borat). Or by US govt before issuing any visa.
After reading users’ comments in this post it is clear that people are not comfortable with this culture (atleast non-asians). So I have a humble request to Tim that please don’t encourage this culture and try to take this post off for the sake of society, if possible. Blame yourself if tomorrow you see Americans negotiating for pennys on the street.
And yes, there are some non-facts in your post. Please try to update the post according to some users’ comments, they are right.
Thanks!
Hey Tim,
Thanks for exposing this strategy…I’ve experienced it many times so far.
100% loose-loose strategy.
When someone tries to pull a stunt like that, if I can’t help them see the value they are getting, I send them somewhere else. Right away. I don’t want my services to be commoditized.I sell VALUE and RESULTS and not vegetable. I don’t want to deal with people who adhere to this “cheapest possible” model at all cost. It”s a loose-loose proposition to compete on price. I actively refuse business like that.
Look, the cheapest people are the most trouble long term.Not only do they insist on the cheapest price for everything, but they are a drain on your resources post purchase. Those of you who run your own businesses know what I am talking about. Is your business a charity? I didn’t think so.
30% minimum discount? Hell, no, if your products and services are priced right. Most businesses margins are so small nowdays, there is no way they can afford to give that kind of discount. Or they’d go out of business.
Yes, this model will probably work for one off transactions, but if people think they are going to have a long term ongoing business relationship with someone, they are sadly mistaken.
Jack