Travel Tips: The 10 Commandments of Haggling

In many countries around the globe, an item's asking price is just the starting point. Bargaining is the accepted — and expected — method of reaching a compromise between the wishful thinking of the merchant and the budgetary restraints of the tourist. In fact, in many middle eastern countries, haggling is such a social institution that the vendor will invite you to drink mint tea before the discussion commences.

In Europe, bargaining is common only in the south, but you can generally negotiate prices at outdoor markets and with street vendors anywhere.

This activity is not only good for your wallet — it can also be an entertaining game if you have a little patience and can do it with a playful spirit. Many travelers are addicted hagglers who would gladly skip a tour of a Portuguese palace to get the price down on the black-clad lady's hand-stitched tablecloth.

Still, there are certain ground rules that should be observed to insure that you don't cross the line of acceptable behavior while getting yourself a good deal.

(MORE: 6 Money-Saving Travel Secrets)

The 10 Rules of Successful Haggling

1. Be sure that bargaining is culturally appropriate. For instance, it's foolish not to haggle over ceramics in Marrakech, but it's bad form to "make an offer" on a tweed hat in a London department store. One way to find out if a price is fixed is to show a little interest in an item but then say, "That's too expensive." You've put the merchant in a position to make the first offer. And don't assume his first offer is his final one. In general, you can be confident that the asking price is twice, or even four times, what the seller is willing to accept.
2. Find out what locals pay for similar items. Prices can vary drastically among vendors at the same market — even at the same stall. If prices aren't posted, assume there's a double price standard: one for locals and one for you. If only tourists buy the item you're interested in, try to find out what an Arab, Spanish or Italian visitor would be charged. Merchants assume Americans are rich. And they know what we pay for things at home. I remember once thinking I had done well in Istanbul's Grand Bazaar, until I learned my Spanish friend bought the same shirt for 30 percent less. 
3. Decide what the item is worth to you. Price tags, ultimately, are meaningless and can actually distort your idea of a thing's value. The merchant is playing a psychological game. Many tourists think that if they can cut the price by 50 percent, they are doing well. So the seller quadruples his prices and the buyer happily pays double the fair value. The best way to deal with crazy price tags is to ignore them. Before you even ask an object's cost, determine its value to you — and factor in the hassles involved in packing it or shipping it home.
4. Guess the vendor's lowest price. Many merchants will settle for a tiny profit rather than lose a sale entirely. Promise yourself that no matter how tempting the price gets while you're negotiating, you won't give in until you get your price. If you're not entirely satisfied, walk away. He'll likely call out one final number. If it's acceptable, go back and buy. Also remember that prices often drop at the end of the day, when people are packing up.
5. Act indifferent. As soon as the merchant perceives the "I gotta have that!" in you, he's got the upper hand. He assumes Americans have the money to buy what they really want.
6. Employ a third person. Kind of like playing "good cop, bad cop," you can bring along to profess concern about your ever-dwindling budget or announce he doesn't like the price or is in a hurry to to return to the hotel. This trick can work to bring the price down faster.
7. Impress the merchant with your knowledge. If you know your stuff, the seller may be impressed, and you'll be more likely to get good quality. Istanbul has very good leather coats for a fraction of the U.S. cost, so before my last trip. I talked to some leather experts and was much better prepared to confidently pick out a good coat $100.
8. Obey the rules. Don't hurry. Bargaining is rarely rushed. Get to know the shopkeeper. Accept his offer for tea, talk with him. He'll know you are serious. Whenever possible, deal directly with the owner: You won't pay a salesman's commission and he's in a better position to lower the price. Bid carefully. If a merchant accepts your price (or vice versa), you must buy the item.
9. Show the merchant your money. Physically display the amount of cash you're prepared to spend and offer him "all you have" to pay for whatever you are bickering over. He'll be tempted to just grab your money and say, "Oh, OK."
10. If the price is too much, leave. Never worry about having taken too much of the merchant's time and tea. They are experts at making the tourist feel guilty for not buying. It's all part of the game. By local standards, most merchants are well off.

If haggling isn't your cup of tea, bear in mind that you can generally find the same souvenirs in large department stores at fair and firm prices. That kind of shopping is quicker, easier and often cheaper — but to my mind, not nearly as much fun.

Rick Steves writes European travel guidebooks and hosts travel shows on public television and public radio. Email him at [email protected] and follow his blog on Facebook.

By Rick Steves' Europe