It's taken me a while, and a few times of realizing that I probably just got ripped off before I have become decent in the art of bargaining. It's definitely a skill worth having, and it's a fun one to practice. Here are some steps I've found, that when followed, lead to a good bargaining experience.
First. Look around at all the stuff. When you see something you like, let your gaze linger. IF the shop person is being hovery, DO NOT TOUCH. If they are barely noticing you... then it might be ok to run your fingers over a few items.
When you see the thing you want, look at it for a while. Try to make them come to you. Most likely, they'll point to what you're looking at. You'll move your head casually to one side as if to say "Yeah, nice, but I'm not sure it's worth my time." Then they'll try to indicate, probably in broken English, that they will give you a very good price for it. At which point you look at them with one eyebrow raised and say: "How much?" Or if you want to attempt sounding Chinese: "Duo shao qian?"
They'll type a number into their calculator for you to look at. You glance, and shake your head with a frown. Then you'll pretend that you don't care too much about the object anyways and start to move on. They'll start shouting and waving their calculator at you, asking you mostly in Chinese to set your price. You take a step further as if to walk away, at which point they will probably shout "Ok! OK!" and punch a new number into the calculator. You pause, look at the number thoughtfully, and then you'll do some math in your head. Cut the number in half. Then subtract some. (So if the number in the calculator is 100, maybe you'll offer 25 or so.) Type that number into the calculator.
The shop keeper will look at with you with a disbelieving expression. She'll roll her eyes and type in a number slightly smaller than the one she'd typed before. You'll raise your price just a little bit... and then she'll lower again. At this point you'll shake your head and turn to walk away. If she truly was quoting you an outrageous price, and she probably was, she'll start shouting again, and this time when she pulls your attention back, the number in the calculator will be decently smaller. You can at this point, give an inward grin... and if you are feeling really adventuresome, you can try to talk her down just a tad further. But if you've gotten her down almost as far as you'd like, and if you really want the object, and you are actually ok with the price, THEN you can nod your head and hand over your cash.
If you are smart shopper you'll follow these steps. Not always precisely in this order, and with not always the same results, because not all shop keepers are created equal. Some are much easier to bargain with than others.... but these steps can be helpful when working with anyone. When bartering you'll definitely use the walking away one. Multiple times if you're smart. That's the most important one. Perfecting the aura of "I don't care and there's no way I'll pay that much."
Now when you head to China yourself you'll know :)
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