Aim not to pay more than the Market Value of a product or services

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If you have ever been around wealthy people, you may misjudge them to be stingy when it comes to spending their money. The truth is they always aim to pay for the true Market Value of any Service or Product offered to them. They are the biggest negotiators when it comes to big purchases such as houses, cars, big machinery and equipment. They are always willing to pay for quality over quantity provided the product value is worth its purpose and useful life.

They have a different negotiating strategy compared to the usual one where most people would rather base their negotiation on their affordability to try and get the supplier or contractor to reduce their price. That is the wrong and cheap way of negotiating, you are telling the service provider that you do not have enough purchasing power and are not worth retaining.

You got to target their weakness which is the competitors, if you can quote to them that someone is willing to give you the same product for a better price then that is a valid basis for your negotiation. It tells them you are well experienced in the market and they risk having you take your business to their competitor even in the future. There are four approaches to determining the market value for the product and services offered to you as a consumer.

Products in Supermarket and Retail Shelves

These are the products you will get in retail when shopping in person. One option is to search for the product online first on the google (shopping) option and compare the results. But this can be counterproductive if you were to just walk into the shop to buy a product. You have the option to use your QR and Barcode scanner to scan the code on the product.

Note that the same product type with the same specs will have the same barcode but differ in Lot and batch number. Your goal is to sample prices of the same branded product from different retailers to get an average cost that can give you an idea of the market value versus the tag price you see in the shop you are in.

Activity

Choose at least one barcode from the image, Scan each using a barcode scanner, you may need to install the App first - some barcodes are compatible with a QR scanner. Select google search, compare prices and reply with a screenshot and percentage difference of the highest vs lowest price listed.

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Pictures taken by the author

Calculate the % difference by subtracting the lowest price from the highest price, dividing that number by the lowest price, and then multiplying by 100

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Online purchase

Always do your basic search, if you are using a certain app like Amazon, Snatchers, Wish or Takealot. Always copy the exact name of the product and search for it within the app first. It may pick different stores that are offering the product at different prices.

If there is no difference, then search outside the App in google and then select shopping tap. This will give results of various shops that have the same product. Some shopping Apps include the product barcode in item details. From the barcode scanner, there is an option to enter the code manually which relies on the 13 digits than the 95 black and white lines. The shopping apps also have a barcode scanner which you can scan under search selection and compare the retail price in the shopping app database.

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Products in showroom

Any big purchase you make without negotiating the price is likely to be overpriced by 10-30%. The aim is to pay for a true market value and not be ripped off. Suppliers and service providers will most likely quote you the highest amount and drop to the average if you apply the three-quote rule. Even if a new car is in the showroom and has zero mileage, avoid buying it at the price displayed on the sticker.

Approach at least three garages that sell the same car. Request a quote from the first garage which will likely be the highest, then approach a second garage and make them aware you got a quote but do not reveal the price. you can deliberately strike out the price and send them the quote so they can quote you against the same specifications.

Usually, they already have a sale and profit model for a set for a high, mid and low cost. So if you tell them you have a quote, they already know that to beat the other garage they have to be below the "high". The third quote is likely to be between medium and low Value.

For a purchasing house, prepare a checklist that aims to spot anything that is in bad condition and use it as your negotiating power. Preferably view the house during the rainy season, and check for new fresh paint most do that to cover up mould and they would sell in the dry season if the roof links.

Test everything including the stove, lights, plugs, cupboards, taps and water pressure and drainage system if it's a flat terrain. You should aim to view it at least twice and you will likely find something faulty unless it's a new development. Once you identify faulty things, get the highest quote on the costs to fix them and use that as your negotiation power.

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Price for Services

This follows the same logic as the showroom purchase as it also requires at least three quotes, except that there is no direct way to measure the quality of service relative to labour costs. It is important to get reputable service providers. But for big companies like in the example of car workshops, apply the three-quote rule once you get diagnostics.

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Pictures taken by the author

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My sister needed to reinstall a new coolant pump for her car and they quoted her 15K. We shopped for the other two quotes under the same reputable franchised garages. Within two hours we managed to get the price dropped to 13k and the final offer was 9.9K. So if we just took the first garage offer, we were been overcharged by 3K, meaning the true market value was roughly 8K excl. VAT. But one can avoid this if you act like a stingy person, and think like a wealthy person!

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Remember to also Aim to build Wealth over being Rich, follow the link to find out how Link

The first person to post the correct answer from the activity will get 5% of the HP from this post.