The British are just not comfortable haggling. We think it's the reason Priceline Europe hasn't been the success that it's American cousin has been. Give us a price and we'll decide to buy or not. Ask us to fix our own price and we're a fish out of water.
However, many of the places we will visit on holiday this year expect us to haggle. Prices for foreigners will be jacked up and shopping is seen as a game of sorts.
The object of this game for the seller is to extract as much money as he thinks the buyer is willing to pay, and the object for the buyer is to figure out the lowest price the seller will take. If all goes well, the parties will land somewhere in the middle, shake hands and be on their respective ways.
How much bargaining is acceptable will depend on where you are and what you're buying. In many parts of Asia, Africa and the Middle East, you might insult a shop owner if you don't engage in the bargaining process. In others regions, like the South Pacific, you can cause insult by trying to pay anything lower than the asking price. Check a travel guide or ask other travelers before you head out to shop.
Before you go out to buy anything shop around until get a rough sense of what the price range is. You can do this by visiting fixed-price stores such as supermarkets or department stores. If you're shopping for jewelry, fine fabrics or other items that are commonly imitated, make sure you know how to check for authenticity and quality - otherwise, your deal may be less attractive than you think. If you're unsure, shop in reputable stores rather than street markets.
Finally, before you start to haggle, think about what the item is worth to you, and set a maximum price that you're willing to pay.
When you locate something you want to buy, try not to look too excited or you'll instantly give the shopkeeper the upper hand. Very casually ask the price of the item so as to let the shop owner begin the bidding.
Depending on where you are and how rich you look, the price will likely be inflated anywhere from two to four times the "real" price. At this point, depending on your personality and theatrical ambitions, you can either feign utter devastation and anguish that the price is so vastly out of your meager financial reach, or you can just say "Sir, that price is too high."
The shop owner will then ask you how much you want to pay. The games are now officially underway.
Keeping in mind your background research and maximum price point, it's time to make your first bid. The key here is to remember that neither party expects the other's first bid to be their final offer. Offer about half of what you're willing to pay or some reasonable fraction of the price quoted by the vendor. But make sure it's reasonable, and then prepare yourself for the inevitable laughter or displays of shock from the other side.
You'll hear that the vendor pays more for the item than the price you offered, so he can't possibly sell it that low. However, since it's the end of the day (or the beginning of the day, or time to go for lunch, or the third Holy day in August, or he likes you, orů.) he can make a concession on his first price. Regardless of his reaction to your first offer, don't allow yourself to feel intimidated - it is all part of the dance. After hearing his second offer, you simply come up a few notches, he comes down a few, and so on.
If, after a bit of this back-and-forthing, you and the vendor still haven't agreed on a price, don't give up, bring out the cash, equal to the amount of your last offer, asking the vendor once again if he'll accept that amount. The sight of cold hard cash might make him reconsider. Be prepared for this by having differing sums of money in different pockets. If you pull out a few measly bills from a thick wad, you'll only confirm to the vendor that you can afford to pay more.
If this doesn't work, make a quick mental calculation to see what you're haggling over in pounds sterling. I nearly carried heavy cases for ½ mile down the beach in the mid-day sun in Thailand over 50p a night on a room rate! It's easy to do when the foreign currency units you're dealing with are spoken of in terms of hundreds or even thousands.
If you are still unsatisfied with the price, or you want to test the vendor's resolve, start leaving the shop. Tell him you're going to shop around or that you need to think about it. If he stops you, the next round of haggling will begin. If you make it more than ten feet outside the shop and he hasn't called you back, chances are good his last price was his best price. You can either use this price point at the next shop you find, or return and hand over the cash.
Don't lose sight of the fact that haggling is a form of social interaction, not a fierce competition. There is no excuse for either 'side' being rude or arrogant. Remember that, as with most situations in life, a smile goes a long way.
And finally, when you make an offer, be prepared to pay up. It is bad form to have your offer accepted and then say you changed your mind or want to shop around some more. Although haggling is a 'game', it has its rules of etiquette and fair play like any other.