Thursday, September 12, 2013

Is it Moral to Let a Sucker Keep His Money?

I know I owe you an article on negotiation.  But in planning out the post, the Mrs. and I got into a good discussion on the ethics of making a purchase or sale, which is way more interesting than negotiating tactics anyway. That article will come soon enough.

Mrs. Done by Forty took issue with a phrase I throw around from time to time: "It's immoral to let a sucker keep his money." I first heard the line in Rounders, when Mike McDermott quoted Canada Bill Jones, justifying a poker hustle he and Worm were running on a group of trust fund babies. Jones is also credited with saying that a "Smith & Wesson beats four aces," which gives a better understanding of the kind of person he was. Canada Bill Jones was a real and true riverboat gambler from the 1800's, who amassed a fortune off of marks using a three card monte scam, and then lost it all back just as quickly to professionals gamblers and short card cons. Jones died broke in a hospital, as Chicago area gamblers had to pay the local mayor for his funeral expenses. I don't know what it means that I agree with the ethos of such a man, but there it is.

My Take:
When I am making a deal with another party in a "fixed pie" negotiation (i.e. - the thing being purchased is static, and we are simply negotiating price), I assume that we are operating under the same assumptions. Unless we're brokering a both-win scenario, we both know it is a competitive situation. No one out to cheat or lie, but we are both working hard to get the best deal for ourselves. The corporation selling me a good or service is trying to extract as much money from me as possible and isn't leaving anything in the bag. I am trying my best to pay as little as possible and I'm similarly using everything at my disposal. Each party is trying to improve its own position, and there is no benevolent third party looking out for either one of us. Simply put, every dollar my opponent wins in the negotiation takes another dollar out of my pocket.

Here's where I think the quote comes in. If I am dealing with an individual who seems like a novice, I am doing him no favors by keeping the kid gloves on and giving him a better deal than he has negotiated. Next week or next year, he is going to be forced to make another major sale or purchase, and he will make the same mistakes and omissions, quite possibly on a larger scale. If on the other hand, I do my best and he loses badly on the deal, he potentially will learn from that experience, will not fall for the same tactics again, and will hopefully be in a better position for all deals going forward. The benefits of learning from one's mistakes are potentially huge. We learn by interacting with a competitive world in a genuine way, and if we lose badly, we at least learn well and won't be fooled again. Or so I tell myself.

Mrs. Done by Forty's Take:
My wife is more moral than I am, and rightly reminds me that the people I am negotiating with are actual people. She would much rather feel good about the deal than walk away thinking she had taken advantage of anyone. She believes firmly in both parties feeling good about a transaction; anything less is a disappointment.

She also believes that I'm working under a faulty worldview. While corporations might be drawing up complex marketing & sales schemes to get my dollars, the woman selling her used Toyota on Craigslist is not. She, like my wife, is likely in search of a fair deal, not the best deal she can pull over on an unsuspecting rube. It's folly to assume her smile and kind demeanor are part of an act. When I go into the negotiation assuming she is out to take as many dollars out of my pocket as possible, and act accordingly, I am forcing her hand. While she initially wanted to forge a both-win deal, she is now forced into a competitive negotiation unnecessarily. In the end, she is not going to learn negotiation skills: she's just going to learn the guy she's selling her car to is a big jerk.

The Example:
About 18 months ago, my wife and I had a bad habit of searching Craigslist for scooters. Not that we needed a second scooter, but we wanted one. My wife took ours out every day, and that meant I'd either be taking the gas guzzling car or my bike out in the Arizona heat. Over time we got good enough to spot a good deal, and even considered moving on a few of them, but nothing really jumped out at us. Then one Saturday my wife stumbled on what seemed to be a misprint: a 2007 Yamaha Vino in mint condition with less than 800 miles, for just $900. At the time, the Blue Book value was up near $1600 (and even today it's still around $1,400.) The ad had just gone up an hour ago, we knew it wouldn't last long, and decided to go for it.

When we arrived at the suburban house later that day, an impossibly pregnant woman who was due to have twins in less than a month, answered the door and walked us out to the garage to see the scooter. It was immaculate. The blue paint shined, the chrome was flawless, and it started right up. We took it out for a spin and it rode beautifully. She said it was a gift from her mother and with the twins on the way, there was no way she or her husband would be riding now. Not that it got out of the garage much anyway, except for her husband making a quick beer run now and again.

My wife and I talked for a bit and we knew we wanted to take it home. And $900 was already far too low of a price. It was clear that the seller hadn't done enough research to see what the scooter should sell for, and had made a mistake in her initial offer. Still, I wanted to do better. Even if she'd made a mistake, why should we pay the full asking price? While my wife saw a poor pregnant woman who shouldn't be forced to haggle over a few dollars, I saw a woman who clearly was never going to use the bike and just wanted it gone. As my wife walked down the driveway to be spared the embarrassment, I negotiated for a short while, citing that the bike seemed to be sitting unused for too long and that it might have some problems as a result. I opened at $800 and after a little back and forth, we settled at $850.

When I tell the story, my wife gives me a hard time for chiseling a woman who was about to give birth to twins over fifty measly bucks. Instead of remembering a fair deal on a good scooter, it's instead an experience that she feels guilt & embarrassment over...and buying those emotions for $50 is a bad deal no matter how you slice it. The odd thing is that I still kick myself thinking I could have gotten the scooter for much less, maybe $750, if only I was more aggressive with the offer and leaned on the fact that she had to get rid of the bike. Not to put too fine a point on it: I was never going to see this woman again. The scooter had the same quality regardless of the price: the only unknown was how little or how much we were going to pay for it. So she'd set the price far too low - what does that have to do with trying to get it as cheaply as possible anyway? What impetus is there to hold back, regardless of who the party is?

What say you, readers? Is better to be fair & feel good about a deal, even at a cost, or is better to try to get whatever you can, regardless of who you are dealing with?

*The photo of a Three Card Monte scam is from malias at Flickr Creative Commons.

43 comments:

  1. Interesting debate! Hrm, for stores or corporations, I wouldn't feel bad, but for by owner purchases, I think I would look at it on a case by case basis. Knowing she had twins, I don't think I would have haggled in this case, especially if I knew it was a steal since she didn't do her due diligence. *However*, also knowing that it was a gift, I also don't think it there's anything to feel guilty about since she didn't take an actual monetary loss from it. I tend to agree that if she knows she totally undersold, that she'll learn from it for future situations (totally happened to me, and have done my homework ever since!).

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    1. Hi Anna!
      That's an interesting distinction: we feel very different negotiating with a professional representing a store or corporation than we do with an individual. I feel the same distinction, though I wonder sometimes if that's the right way to view things.

      There's a big part of me that agrees with you; since she was pregnant with twins, maybe the right thing was to just pay full asking price. My emotions get in the way, I think. There's another part of me that wants to just treat everyone the same, and to ruthlessly negotiate with pregnant women, children selling lemonade, and the impoverished in foreign countries selling their wares. :)

      I think Mrs. DB40 will jump in on the comments here in a bit so I'm interested to hear what she thinks on the subject.

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    2. I completely agree with you, Anna, about negotiating on a case by case basis! I have no qualms haggling with a telephone company about my monthly bill, or even a private seller if I feel like they are trying to take advantage of me. As the Mr. summed up quite well, it's more an issue with how you approach the situation from the get-go. If I think I'm being taken advantage of in a negotiation (which I usually assume -perhaps unfairly- to be true with large corporations), I push back, and we end up settling in a place where both parties feel a little bullied and not 100% satisfied. The best purchases/sales I've made fall under what Bryce describes (in the post below)- where you're happy to help someone else out, and in doing so you benefit as well (whether or not you could have squeezed a few more dollars out of them and left feeling a little scummy).
      The trick is finding someone who can mutually benefit from the transaction, and approaching it with the assumption that both parties CAN walk away happy.

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    3. I'm in agreement with Anna, at least on some level. If I'm dealing with a real business then I don't feel bad about negotiating in the least. Pricing is part of their business and I'm going to try to get the best deal. No guilt whatsoever.

      I do think it can be different when the situation is more like your craigslist experience though. I would still fall in favor more with getting a good deal, but depending on the situation I wouldn't push as hard and would be more willing to settle a little higher, as long as it was still worth the price. That's really an emotional rather than objective way of looking at things, but that's probably where I fall.

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    4. That seems to be an effective distinction: is the person I'm negotiating acting in a professional or amateur capability?

      I also agree that my emotions play a role, but I'm not entirely convinced that that's a good thing or not.

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    5. With corporations or stores, it's not so much that I think they're trying to take advantage of me (well... though I don't not think this at times, either!), but more that I know the sales rep. I'm dealing with isn't really taking a personal "hit" from the negotiation or absorbing any loss from it. I do agree that if it's a win-win situation, that's for sure the ideal scenario (though perhaps my heart's been hardened over the years, because if it ends up me being slightly more winner then I tend to be happier :)). When purchasing/negotiating in foreign countries, that brings up some pretty interesting moments I've had when in those situations... may I link this post into one of my future posts discussing this? :)

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    6. Hi Anna,
      I'd be honored if you linked to anything here. Feel free to do so any time.

      You've introduced another interesting wrinkle into the discussion: the fact that a sales rep isn't typically taking money out of his own pocket if he gives you a discount, whereas the guy in his driveway definitely is. It complicates the negotiation tactics.

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  2. I was trying to make some space in our garage a year or so ago. I put an add in craigslist that the first person to contact me could have my old worn out XL600R motorcycle for free. Needless to say, I was contacted right away. When the person came to pick up the 600, he tried to talk me into taking $100. I said no thanks. It saved me the trouble of having to find a wrecking yard that would take it. I also got him to take all the extra dirt-bike tires I had for the bike, which would have cost me a bunch to get rid of at the local land fill. He was happy, and I was happy. No money changed hands, but we did fill out the change of ownership paperwork for the DMV. Seemed like a win-win to me.

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    1. Hi Bryce. That sounds like a great both win deal if you were happy just to have it taken off your hands. I'm similar in that there's a threshold where instead of trying to make a couple bucks, for low value items, I'll just give them away. I think we all have a dollar threshold where our time is worth more than the money.

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  3. Interesting post. My wife an I are very similar to this, but I guess she softens my hard edges and I help her street smarts. However, I do find that I am more aggressive when purchasing than when selling. Maybe because it's an item I no longer want or need vs money which I do?

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    1. Hi Jason,

      I'm the same way. As I purchase for a living, I go into a different mode when buying than I do when selling. It's something maybe I should work on...or not.

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  4. Wow...you tried to hustle a very pregnant woman who was having twins...have you no shame?! haha, j/k. I see your point. She didn't do her research, didn't want the scooter and just wanted it gone. If she didn't like the price you offered she didn't have to sell it. I'm not a good negotiator anyway, but I'm more like your wife. I also differentiate between negotiating with a non-professional and regular joe. Speaking of people in impoverished countries selling their wares (in your comments)...I actually was somewhat annoyed at the tourists who were playing hardball in the negotiations (depending on the situation). Granted they do mark up the prices to tourists and I am fine with negotiating a fair price. But there were impoverished gaunt little kids trying to sell some souvenirs for let's say $5 USD and the tourists were trying to get them down to $4 USD. It's one freaking dollar...just give it to the kid...relax, even if you overpay by one measley dollar, it is no big deal. $1 is a much bigger deal to the impoverished kid.

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    1. It's weird, but there's an odd pride I get from knowing I can haggle a bit with a pregnant lady. :)

      I agree with your point about negotiating with the poor (or, if you're a real jerk like me, poor children). For one, the leverage is almost unfair: someone whose kids are on the brink of starvation is going to take a bad deal just to get some money, any money, to take back to his family. To the American tourist, there is no pressure: he can just walk to the next merchant if he doesn't like the deal. And like you noted, that dollar to you is a pittance while it might mean a few days worth of food to a needy family.

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    2. This is so easy to fall into when travelling! I agree that it's silly to haggle over a dollar that could clearly benefit someone else more than it would you. However, in being a fairly frequent international traveler, I have to fight my ego when clearly being charge 3x the taxi cab fare from the airport that a local would be charged. It's not so much about the money as not wanting to be a sucker... but who cares? Your comment is a good reminder to empathize with the person you're negotiating with, and measure the success of even simple negotiations (like cab fare) in emotional as well as financial gains, even if you have to pay a gringa ("white girl") tax to do it. Maybe it's as simple as thinking of a transaction as giving money rather than it being taken from you.

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    3. Hey Mrs. Done By Forty! Yea, I agree with you. A lot of times for cabs and tour guides, you have to negotiate because they will take advantage of you as a tourist. Actually a cab driver in a foreign country really scammed me...first he overcharged me, then he kept saying the bills I gave him were ripped so I would give him a different one (It turned out he gave me counterfeit bills). In anycase, I do have a soft spot for little kids. And even for a poor native selling handcrafted souvenirs for a few bucks.

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    4. I know my wife has suffered that same scam, and I'll probably at least be subjected to it when I head down to Peru in a couple months, too.

      Maybe when I'm down there, I'll exclusively buy gifts from individuals or kids I think that might really benefit from the sale, instead of heading into stores.

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    5. I'm with Andrew---pregnant ladies and kids? A pregnant lady expecting twins?! I'd be afraid of karma for sure! If she had been asking an outlandish price that would be a totally different situation. I'm so with you, Mrs. Done by Forty...bring on the telephone and cable companies, but I'll leave the poor and needy be.

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    6. Yeah, we chose a particularly bad example here. It's pretty rare that I negotiate with pregnant ladies though, honest!

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  5. This is a tough one. I can't really fault you because negotiating is probably hard-wired into you at this point, as it is what you do for a living. I think that's an important distinction. There are also some people that always want to get a deal on something. I also think it's easier to negotiate when dealing with business to business transactions, since everyone is likely out to get the competition.

    When dealing with individuals, it's a harder pill to swallow. Like Anna pointed out, the pregnant woman DID receive the scooter as a gift, so she probably didn't care how much she sold it for as she would be profiting regardless. I think I would have been happy to find that the price was indeed correct, and would have taken it for that price, but I don't negotiate very often at all. You bring up a good point about the emotions of your wife, too. If she has negative feelings associated with the purchase, she might distance herself from the scooter even though it was a great buy. Sometimes it's not worth it if you're going to be left feeling a little hollow.

    Really interesting post/debate!

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    1. Thanks, E.M.! One of these days I'm going to have to tell a story that doesn't paint me as a real douchey guy. ;) (Here's something I left out: the ad said the scooter came with a cover, and she forgot to put it in the trunk. So rather than just let it slide, I came back over later in the day to get it...I'm cheap like that.)

      In retrospect, I'd have gladly paid an extra $50 so that my wife felt better about the transaction though. That part of the deal, how we'd feel about it afterwards, never really entered my mind. I didn't do a great job with the negotiation.

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  6. Oh I'm so with the Mrs on this one. I prefer situations where both parties depart satisfied with the transaction and DEFINITELY don't want to participate in any transaction where I think we are being unfair to the other party. (This falls into the same category in my head as not wanting to be slum lords.)

    For example, Mr PoP recently replaced the lawn mower at our rental unit (a 6 year old mower that wasn't well built to begin with and had been repaired a couple of times already) with a 25 year old commercial mower that he had restored after buying on Craigslist.
    New (err old?) mower procured, we didn't need the mower that Mr PoP was saying was on its last legs. So when Mr PoP proposed selling it on Craigslist, I said, "I can only feel good about selling that mower if you think it will genuinely last the person through another rainy season. Otherwise let's give it away on Freecycle." He said it could and sold it for $45, so I hope he's right. In the end, the people we deal with are extended neighbors and possible future friends.

    Call it karma, or whatever. But isn't the idea of knowing both people are pleased worth more than $45?

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    1. See, the trick is fooling yourself into thinking it was a fair deal regardless after the fact. ;)

      I agree with you. Our ethics are worth more than a few dollars and we ought not violate them over a pittance.

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  7. It's a dog eat dog world out there, and the law of the Jungle is kill or be killed. I have to side with your view on this argument. A negotiation is a competitive thing. You don't know that person or owe them anything. You owe yourself the best return you can possibly get. And for that I think its alright to put yourself in the best possible position. Just don't do anything shady!

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    1. Whoohoo! Someone took my side. I completely agree that you owe yourself the best deal you can get; you phrased it better than I could.

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  8. I think there is a bit of a middle ground. The situation you described I see as perfectly acceptable. You tried to save a little cash on a really good deal but didn't try to rake the lady through the coals. Another thought is if you don't complete the sale, someone else might come along and that person would get even less money. Then they really lose out on money.

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    1. Hmmm, that's interesting. I'd just assumed that the next person would pay the $900, but what if they only offered $600?

      I agree that this example was kind of a middle of the road approach; it wasn't a hairy negotiation.

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  9. Good Lord! I've never negotiated a price for anything, ever, once, in my entire life! In fact, the entire idea of it makes me feel INTENSELY uncomfortable. I just figure the price is the price, and trying to talk someone down is unethical and mean just on principle. I totally see your point with corporations, though I didn't really know it was possible to negotiate prices with them. I really don't think I'd have the guts to do it... I'd be afraid somebody would yell at me.

    I think this is probably the reason I've never tried to sell anything on Craigslist. If somebody wanted to haggle over price it would make me really uncomfortable, so I'd probably cave in, then I'd be pissed, and I'd probably spend the next day or two crying - totally not worth it. I'd rather just give it away and get to enjoy feeling benevolent than suffer through that amount of trauma.

    I don't know what this says about me, but your perspective is certainly enlightening. I guess my assumption has always been that haggling is pretty much the moral equivalent of bullying - it never occurred to me that someone might think it to be a game. I always just assumed that hagglers were morally bankrupt assholes. Hmmmm... perhaps I ought to try to adjust my thinking on this one, though honestly, the entire topic makes me want to crawl under a rock and hide.

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    1. Hi EcoCatLady,

      I think your views are typical of Americans, who are generally uncomfortable with negotiation. Outside of our country though, negotiation is common and expected, even on things we'd never consider bargaining over, like groceries.

      Part of my comfort with negotiation comes from my mother, I think, who came here from the Philippines in her twenties and taught me to haggle as a child. She refused to pay full price without at least trying to get a discount. When we'd go to KFC as a kid, my mom would order a bucket and then try to convince the workers to put more breasts in the bucket instead of drumsticks...to this day I'm still in awe of her courage to negotiate anything, even the small stuff. And yeah, we usually got a couple extra breasts thrown in there.

      I remember trying for the first time as a kid in Honolulu at the international market, bargaining over a pocket knife: a little fold out with a whale carved into the handle. It was a nerve racking experience. But my mom stood behind me and let me haggle. The guy wasn't budging and only when I started to walk away did he give me the dollar off I was asking for.

      Anyway, I understand that in our culture it's definitely not a very common practice to negotiate. But if you're interested in trying it out, I'd suggest just asking this phrase: "Can I get a discount?" I think you'd be surprised how much you can save just by asking.

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    2. I always find your input insanely entertaining ECO. That's so interesting that negotiating makes you so uncomfortable. It's part of finding the fair market value of a product or service. I'd love to hear about your first experience! Craigslist is a great place to start! :)

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  10. DB40, Great post!
    I find it amusing that we have so many similarities. I keep spotting them when we write. Beyond that, it always appears that our wives keep us in check and have totally different views on some of these topics.

    In this instance, I'm just like you. I'm just a ruthless bargain hunter that finds enjoyment in haggling and negotiating for a deal. I don't exactly know where it came from, but it's been in my blood for quite some time. I've bought and sold hundreds of items on Craigslist and my goal is always the same - to be profitable.

    On the other hand, my wife hates confrontation and doesn't like the idea that a good deal might come at the expense of someone else getting a "bad deal." I guess there is room for both, but I view the whole process and fair. If someone doesn't take the time to know the value of the item they have, why should I respect that ignorance when cash is on the table...?

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    1. Hi Jacob,
      I keep noticing the similarities, too. Thank goodness for our wives, right? Though I have to say you guys are destroying us on the spending front; $12k is really impressive.

      I agree with your approach though: the process of negotiation is to get more value, not really to make friends. I like the notion that it's not personal...it's a business transaction. Like you said, if someone else doesn't do their due diligence, why is it my job to help them out? (And is it really helping?)

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  11. Love the dialogue, you have a great group of followers. Clearly there's a gender bias. As a female, I love a good deal and can haggle with the best of them during what I deem haggle-appropriate arenas. If you're selling something on Craiglist, you should expect a lower offer when someone arrives. If you don't have the backbone to say no, then don't sell your stuff on Craigslist (or do, because I love folks like you). I fully support the vespa negotiation.

    However, my husband will haggle at Kohl's or Target while I hide my face and pray to be anywhere else. Just recently he pointed a small scratch on a pair of sneaks and got 20% off with a second thought. I was more embarassed than impressed. I definitely have my limits.

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    1. Hi Emily! You're right, we are lucky to have such a cool group of readers here. I'm consistently blown away that people actually come by and read, and then take the time to comment. It's rad.

      I do notice that negotiating in a corporate setting, even for something completely justified like damaged merchandise, is still pretty rare in our culture. It really shouldn't be, based on the comments here; the majority of people seem more comfortable negotiating with a professional company's representative than with an individual. I wonder where the gap is?

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  12. It really seems like there's a big gender divide here. For me, at least, a HUGE part of my discomfort is that I was raised to believe that I had to be polite, undemanding, and accommodating above all else. It seriously took me many, MANY years to stop volunteering for anything and everything... I was just raised to believe that it was my responsibility to take care of everybody, and to do what everybody else wanted - even if it was a situation where people weren't actually asking me to do something I was compelled to volunteer.

    I also had enormous fears of being "the boss" at work. I was soooo afraid that people wouldn't like me, and that I'd have to be mean.

    But, I found that with some practice I was able to overcome those issues. By the time I left my job, I had nearly 75 people who reported to me, and I'd even figured out how to do things like fire people. I'm also much better at not volunteering for things - I still struggle with wanting to save all the cats on the planet though.

    Anyhow, I guess my point here is that perhaps there are ways to negotiate and haggle without being a bullying asshole. I'm looking forward to your post on this issue, though, to be completely honest, the idea of trying it really makes me want to puke!

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    1. It seems both our upbringings have a lot to do with how we feel about the subject. And I definitely agree that you don't need to (or even want to) be a bullying asshole in a negotiation. Not only is it a bad way to act as a person, it's generally a pretty ineffective strategy.

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  13. I think in this case, I'm with Mrs Done By Forty! I'd have no trouble negotiating as low as possible with professional traders or companies, however, if it's an actual private seller where I can see the item I'm getting is a good deal, I'd struggle asking for a lower price. My hubby would be the opposite though I'm sure!

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    1. I think that's a popular distinction; people are recognizing that, in some ways, we individual consumers need to stick together...maybe direct our efforts against the companies that are really trying to take the dollars out of our pockets.

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  14. I think $850 is a fair price. :)
    I negotiate a bit so both parties feel they get a good deal. I probably wouldn't push it down to $750. If it was me, I'd wait for the next buyer at that price.

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    1. Thanks, Joe! I agree that if we negotiate, both parties actually feel the get a better deal. Had we actually just accepted $900, she probably would've felt she could've asked for more.

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  15. Honestly it's a lot of work to find buyers for some things on Craigslist. I'm not saying she couldn't have gotten a lot more, but she probably just wanted to unload it and get the cash. I don't blame you.

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    1. Thanks, DC. Having sold things on Craigslist, sometimes I really am just ecstatic that someone is coming by and making an offer. Like you said, sometimes you just want it gone.

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  16. So I think it depends whether they actually are a kid or not. If they're a kid, I think you teach them the lesson, but give them a square deal. When you're dealing with adults, even pregnant ones, anything's fair game. She's under no obligation to sell it to you. It probably made her day just to get some cash for it.

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    1. Agreed: no haggling with children. Unless they're driving a hard bargain...then all bets are off.

      I wonder if we could ever track her down to see how she felt about the whole thing...

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