Rebuilding Your Wealth: Smart Spending

You don’t ask, you don’t get, the saying goes, and it’s never been more true. With the economy flagging, everyone from car dealers and cell phone companies to big-box stores is desperate for business. That means they’re increasingly willing to bargain with consumers, especially those who are able to pay cash or have exceptional credit. In recent months about 70 percent of Americans have managed to negotiate a better price on furniture, appliances and home improvements, among other things, according to America’s Research Group—that’s up from 45 percent a year ago. In this market, says Z. John Zhang, a professor at Wharton Business School who specializes in pricing, the consumer is in charge.

And these days nothing’s off limits. Sixty percent of recent luxury-car sales have included a discount or an incentive package, up from 43 percent a year ago, according to the Power Information Network. National chains like Home Depot, Circuit City and Best Buy are increasingly willing to negotiate; bargaining can save hundreds of dollars on gyms, cell phone plans and rental cars. Even the cost of a truly necessary expense, like health care, isn’t fixed: Haggling with doctors yields a rate cut about two-thirds of the time, according to a recent survey by pollsters Harris Interactive. And even with many hotels already offering discounts as deep as 70 percent on room rates, in this environment you can often get a better room, free parking or free passes to the health club “just by asking,” says Travelocity spokesperson Joel Frey: “Hotels will do anything to win your loyalty.”

But the best deals aren’t advertised, and few Americans are practiced hagglers. Asking for a discount can feel awkward, and being turned down for one is embarrassing. But just getting comfortable improves the chances of success, says Adam Galinsky, a professor of leadership and decision making at Northwestern University’s Kellogg School of Management; research shows that people who think it’s appropriate to negotiate will do better than those who don’t. That’s also one reason many people bargain better when they’re acting on someone else’s behalf, he says, because the awkwardness of being a squeaky wheel is lifted. The good news, of course, is that in this economy, it’s more acceptable than ever.

With no shame in your game, the guidelines are pretty simple: Be polite, ask for what you want, and be creative. Galinsky’s research suggests that making the first offer, and making it specific, frames the negotiation in your favor: “I’d like to pay $350” is a stronger position than “What can you do for me?” Standard strategies still hold—offering cash, knowing what the competition is charging, keeping track of product cycles (cars, for example, are most deeply discounted at the end of the model year and during January and February). And if you can’t get what you want, ask for something else: If a rental-car company isn’t willing to give you a better rate, it’ll often give you a better car; similarly, with one in every three hotel rooms empty every night, an upgrade is a more than reasonable request.