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Should You Negotiate In Poor Countries?

By Erik Folgate

Last week, we vacationed to Jamaica over the Thanksgiving holiday. It was the first time that wife and I had spent a Thanksgiving out of the country. Jamaica has beautiful beaches and beautiful resorts, but much of the country lives in very poor conditions. It was sad to see some of the living accommodations that the locals live in, and it definitely put my abundant life into perspective this holiday season.

We took a shopping trip one day into an area where many tourists visit. Jamaica is famous for theiir Appleton rum, coffee, jerk spices, and wood carvings. The problem with poor countries is that they often try to take advantage of tourists. Souvenir shops and liquor stores often inflate their prices, because they expect tourists to negotiate with them. I often feel bad for haggling a price with someone who might be struggling to pay their bills. However, you must realize that most of the world haggles on price, and it is part of their culture. Here’s a good example of why haggling is important when traveling to countries where it is accepted.

We were looking for some Jamaican rum to take back with us, and we were searching in “tourism row” for it. The cheapest we found a liter of rum was $15.00. On our way back home, we went to a duty free shop in the Jamaican airport, and they had a liter for $12.00. In the states, compare this to buying a bottle of detergent at Wal-Mart for $6.00, but also finding it for $8.00 at your local supermarket. Wouldn’t it be nice to say to that supermarket that you can find that bottle of detergent for $6.00 at Wal-Mart, and you think you should get it for that price? Some stores will match it, but it’s typically only direct competitors such as Target.

The local vendors in other countries will mark up the price of a product by as much as they can get away with. If a tourist will pay their full price, then they make a ton of money, but if a savvy shopper negotiates a little bit, then he or she will deflate the price to a more realistic level. The vendor still makes money, but he or she always has a strike price. The strike price is the rock bottom price that the vendor will sell the item. If you offer below that price, the vendor will tell you to walk away. This is why you should never be ashamed to negotiate. If your offer is too low then most vendors don’t mind you walking away from the sale, because they know that another tourist will come along shortly and pay more than you were willing to pay.

Here’s my strategy: I know many of these people live in poverty, and they must sell their products to stay afloat. I don’t want to rob them, but I also don’t want to be taken advantage of. If a vendor initially offers $20 for an item, then I will usually counter with something like $10. I know they won’t sell it to me for $10, but I know they’ll go down to $14 to $16. They will counteroffer, then you counteroffer, and meet somewhere in the middle. Sharpen your haggling skills in a small scale, because it will help you when you negotiate a price on a car or a piece of real estate.

Feel free to share your negotiating stories while in another country, and let me know your opinion about haggling in poor countries.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • http://www.budgetpulse.com Craig

    I wouldn’t feel bad. Like you mentioned it is part of their culture and they expect to do it. Anyone who would take first grab is basically a sucker. I usually go into those situations with a price I already have in mind that I would pay. Even if that price may be terrible for me, if I can get them to come down to what I think is fair and am willing to pay, I strive for that.

    Craig
    www.budgetpulse.com

  • sipote

    Having been born in El Salvador (considered a 3rd world country), I know that negotiation is part of doing business in these countries. The locals are doing it, why not you? In fact, when I go back, most vendors seem to be willing to haggle with tourist even more because of the potential for them to purchase MORE goods than a local would.

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