If the price is right....

"Price is what you pay, value is what you get". The world's greatest investor, Warren Buffet said that in relation to stocks and shares. However, it is relevance in most areas where money is concerned. I've been doing a fair amount of negotiating since arriving and subsequently have some musing over the relationship in a Kenyan context. 

Let's examine the two aspects, price and value in order, starting with with price. In Kenya (like most places outside Western Europe and North America) price is a very relative concept. Effectively there are no fixed prices, only the price you can negotiate. There are only a handful of places such as supermarkets with non-negotiable prices; and even that won't stop many Kenyans from trying nonetheless ("Uh! You want 70 shillings for the milk! That's very expensive. What's your best price?!"). Therefore you will generally have to negotiate your price. Food, building materials, transport, car parts and repair, building contractors, even matatus... some of the things I've been negotiating since my arrival.

"So how much does this cost? How much does anything here cost?!" (not my photo)

Now negotiating prices is a bit of an art form. As I've previously mentioned in another post, there are two starting scenarios during a negotiation; the crazy/Mzungu price starting point, and the "normal" price starting point.

I've generally been lucky with the starting point in most negotiations (but then again you make your own luck). The contractors I've negotiated with know the situation and know that I know what is fair, so have (with a few exceptions) provided reasonable quotes to start with which only require minor negotiation. Negotiating merchandise has been somewhat different as there are always people willing to rip you off, so the secret is to get a whole series of prices from different sellers first to establish what the rough starting price is, then make further negotiations with a couple of them. This has indeed been my practice. It takes time, but it pays off.

Now I could bang on about the price negotiating thing for a while, but instead I thought I'd give you a couple of the sales lines I've encountered during the last month and my personal ways of dealing with them. I should prefix that they are all from sellers starting from crazily inflated prices, hence the sharp replies!

Seller: "Normally the price is 700 but for you my friend, the price is 500".

Reply: "Normally I'd only pay 50 but cos I like you I'll pay 100".

Porter: "I'll carry that to your car for 150".

Reply : (as I take it out his hands) "That's ok I'll carry myself, buy some water the other end and keep the change"

Prospective (eventually rejected) contractor: (after quoting 250,000 and being  told to come up with another, more realistic quote and email it to me) "Why can't we agree on this today?"

Reply: "Because you have put a 2 on the front of your quote which shouldn't be there. Take the 2 off and we have a deal today, otherwise go away and come up with another quote if you're interested"

Tyre changer: "That will be 150".

Reply: "Tyre change costs about 70 bob"

Tyre changer: "It was a hard to change and took a lot of work"

Reply: "It's a brand new tyre. You get paid for the result you do and not for how much of a mess you make of it".

The replies in the examples may sound harsh; price negotiations are not always so rough; most have been very friendly! 

The three main rules I adhere to while negotiating are:

1. during negotiations, delay revealing your budget or how much you want to pay as long as possible; 

2. drop in references to possible repeat business "if our first deal is satisfactory" and 

3. always take your time over the final decision and if you're not happy walk away; it's surprising how much the price can drop when you do.

But after haggling over price you come on to the value side of the equation. The value is easy to ascertain if you have two different objects with the same price; the one with the lower price obviously provides the better value. However, often the two objects are not the same and there is a price-quality trade off which will determine the value side. 

A particularly interesting set of negotiations, from a value point of view, that I've had to deal with while here is that of building contractors. While the natural inclination might be squeeze building contractors to the limit and take the lowest offer, I believe (from limited experience) that it is not the best idea. Sure you can save a few bob only to have a shoddy job and hence receive poor value. Even a good contractor might be tempted to do bad work if squeezed too much in terms of price. Contractor negotiations have probably been the most interesting, as you are walking a fine line of cutting down prices without doing it to the extent that the guy on the other side of the table resents you and become unresponsive to your subsequent requests.

As a closing thought, it is easy to think that it is mean for someone like me (who while far from rich is  generally coming from a much better position compared to those I negotiate with) to push as hard as I do when negotiating. Surely it doesn't matter if I pay closer to the Mzungu price, it spreads the wealth to people who need it more? Or does it?

The funny thing is that I find this a very idealistic argument. My experience of people who ask the Mzungu price and stand firmly by it is that they are with few exceptions, greedy people who won't truly appreciate the extra they earn; they literally grab the money out of your hand and put on a mischievous ear to ear grin as soon as they have it in their hands.

It sounds judgmental. Hell it is judgmental. But the majority of people I have eventually transacted with after tough negotiations have provided high quality goods/services. I find it much more fitting to negotiate hard the price first, complete the business and acknowledge any "good value" received after the event; not only by explicitly stating satisfaction, but also by (if suitable) tipping or promising repeat custom. And maybe during any repeat custom I won't' be as demanding in the negotiations!