Answer: You can’t know — but you can haggle. And how!
A recent survey suggests a quarter of consumers go online to find the lowest price on an item, but it doesn’t say if they find it. Maybe that’s because the answer is unknowable. Businesses, it turns out, can’t be sure if their prices are the lowest, or even if an item that’s on sale will be profitable.
Even when you think you know, it may be difficult to get the price you want. Consider airline “low price” guarantees which promise to match a fare and add a little bonus for anyone who can find a better fare. But as Sarah Steele discovered recently when she tried to invoke one airline’s low-price “guarantee,” the fine print contained so many clauses that it soon became apparent the company would never keep its word — even with written evidence of a better rate.
“I have proof that there was a lower price at the time I purchased my ticket,” she told me, adding, “I feel like this is fraud.”
Guess what, Sarah? It is fraud. But unfortunately, it’s perfectly legal, too.
So how do you actually get the lowest rate?
Shop around before buying.
Steele should have done her fare shopping before visiting her airline’s website to book her ticket. A lot of companies like to lure you into a “direct” booking with a low-price promise, but the truth is, once you’ve forked over your money, it’s unlikely you’ll ever see a refund or credit. Fortunately, the Transportation Department has a 24-hour rule for fares bought in the United States that lets you cancel your reservation and rebook the lower price, so all is not lost. But you have to act quickly.
Remember, time is money.
Remember that old saying: Time is money? Well, now more than ever, that’s true. Even when you’re just paid the federal minimum wage of $7.25 an hour, if you’re spending three hours to find the lowest price on an item, the product actually costs you $21.75 more than the sticker price. I’ve seen people lose their minds when it comes to bargain hunting, wasting many hours in order to save a few bucks. Don’t let that be you.
Know the lingo.
If you’re in the market for a big-ticket item, also called a “durable good” by economists, then you need to know two words: “price match.” Competition can mean the price you see isn’t necessarily the price you have to pay. I discovered the power of those two words when I went shopping for a much-needed camera upgrade a few weeks ago. I found a good price online, which got better when I clicked the “add to shopping cart” button (manufacturers require online retailers to display a sticker price, but after you add it to your cart, all bets are off). Then I went to my local camera retailer, found the right lens and setup, and asked if he’d price match. He did — right down to the bonus memory card.
Negotiate when you can, but know when you can’t.
I was talking with a friend who grew up in Italy and used to take his American friends to the Posillipo Market in Naples, a bazaar where locals shop for clothes and shoes. Locals know that you never pay full price for the items — you always negotiate. But his American friends were impatient and insisted on paying the full, and wildly inflated, “tourist” rate for their shoes. Point is, you should know when to negotiate, and when not to. Never pay full price for a car. But it’s OK to pay the asking price for groceries — unless you’re at an open-air market.
Don’t forget who has the power.
You don’t need to be a negotiating master to get the best price. Often, it’s as simple as keeping in mind that you have the power. It’s easy to forget that when you’re at the store or mall standing among the displays with a salesman hovering. But in the end, you don’t have to plunk down your credit card and you can walk away. Businesses know that. For you, the threat of walking away is the ultimate negotiating weapon. Combined with your politeness — never threaten to walk; simply say you’d like some time to “think it over” — you can often secure a better deal.
You might not always be able to find the lowest rate, but armed with a little research, smart time management, some insider knowledge, and a basic understanding of the marketplace, you can definitely come out ahead.