What’s the best way to haggle?

By Roger McShane

Many years ago I found myself stuck at a remote border crossing between Bulgaria and Serbia. It was nighttime and the Serbian border guards would not let me in – something about my country (America) bombing their country. Then my ride left without me. As I walked back into Bulgaria, past the bemused authorities, I grew increasingly nervous. There were a few taxis parked on the road up ahead, but the drivers eyed me like prey. I offered to pay $20 for the two-hour ride back to Sofia – a fair price at the time. They countered at $100 and held firm. So I bluffed, walking away down the dark road.

I do not enjoy haggling, but since that night in Bulgaria, it has become a common part of my life. As The Economist’s correspondent in the Middle East and north Africa, negotiating is an essential skill – and not just in the souks and bazaars. The bargaining begins the moment you step off the plane in most cities. A ride downtown from Cairo Airport can cost anywhere from $5 to $30, depending on your ability to haggle. Even common bills are negotiable. So here are a few tips, based on experience and a bit of game theory, to get you the best price on everything from taxis to tea towels.

Let’s start in a market stall in Marrakech, where I recently shopped for a leather travel bag. (Well, faux leather, but don’t tell anyone.) I was willing to pay $40 for the bag; the merchant, I learned later, would accept $10. We had a mutual interest in reaching a deal and, all things being equal, we’d settle on $25. But I had tilted the game in my favour. I arrived as his stall was closing, but left myself time to shop elsewhere. I had already found similar bags at other stalls, so I could credibly threaten to leave. And as I toured the market I took note of the best prices other vendors were offering.

When the haggling began I had more patience and information than the merchant, and less aversion to the risk of negotiations breaking down. I had bargaining strength. Still, the merchant asked for $100 and held a match to the bag to prove that it was “genuine” leather. I asked him to stop burning the bag and countered at $5. He responded with an incredulous scowl and an offer of $80. I said “$10” and didn’t budge as he slowly came down to $20, his “final offer”. That should’ve sealed it, but now I was having second thoughts about the bag. (I do this.) So I told him I’d think about it and left the shop.

Haggling is one of the few activities where indecisiveness is a virtue. I got about ten metres before he came running after me, bag in hand, with an offer of $10.

It doesn’t always end so well, but the tips for the souk also tend to work elsewhere. With unmetered taxis it’s best to study price estimates beforehand and play drivers off against each other. The same holds for car dealers and cable-TV operators, who are often quite responsive to the threat of quitting negotiations. Bargaining for multiple items increases the pressure on a seller to get a deal done. But remember that your leverage dissipates when you show commitment – by getting into a taxi or accepting tea from a shopkeeper – before agreeing on a price.

Of course, sometimes it is simply nice to have tea with a shopkeeper. There is a certain coolness required in haggling – take care that it doesn’t ruin your fun. If you treat Istanbul’s grand bazaar as a theoretical problem, you’ll miss its many delights. If you treat every merchant as an adversary, you’ll become a grouch with cheap leather luggage.

Back in Bulgaria, as I walked away from the taxis, the drivers mocked me. But as I mulled when to call off my bluff, one of them pulled up and offered the ride for $20. He seemed genuinely concerned for my safety. How can you put a price on that?

Illustration Jamie Edler