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REJECTED: Guy at farmers’ market shuts me down

Ramit Sethi · June 7th, 2015

One of the funniest quotes I’ve ever read came from the CEO of Carl’s Jr. He was interviewed about his business and got asked about healthy eating in America.

“My opinion is that the media is the main supporter of healthy eating. We’re certainly not hearing it from our customers,” said Andrew Puzder, who is the CEO of CKE Restaurants, the parent company of Carl’s Jr. and Hardee’s.”And [surveys] show that while consumers say they want to eat healthier, what they actually want is a big juicy burger,” Puzder said during an interview Tuesday with CNNMoney.com.

HAHA!

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This guy took a question on healthy eating…and got them to print a promotion for “big juicy burgers” in a national article. I love you, CEO Andrew.

A photo posted by Ramit Sethi (@ramit) on

Personally, I go for In-and-Out Burger

 

It’s funny, but there’s also a lot of truth to what he said.

Critics love to tell companies to do things….

…that nobody actually wants to do.

For example:

  • Food activists say companies “should” add healthy food to their menus…but when they do it, people don’t buy it!
  • There’s a great podcast episode where some people urged dating sites to remove photos so users could have a more “real” experience, absent of biases and racism. (In fact, when a dating site tried this, people reported liking their dating experience more.) The problem? The vast majority of people hate it. Turns out in dating, looks are important.

You see how easy it is for random critics to tell businesses what they “should” do…without knowing the full story?

It’s not just for businesses — we’ve all been there. How many of us have parents who told us that we needed to major in engineering or go to med school? (Non-Asian people, ignore that last sentence.) How many of our friends think it’s “weird” that you read self-development? Or that you “really need” to try this one diet?

I’ve been guilty of being a critic, too.

Years ago, I went to a farmers’ market where I saw a guy selling t-shirts. Now, imagine an Indian guy walking into a t-shirt stall. It’s like letting a dog loose with 500lbs of meat. The dog is not going to pause and think about the ramifications of his daily macronutrients or the burden of eating now vs. saving for later. He’s going to eat.

Similarly, an Indian person is going to negotiate.

After a lot of back and forth, here’s where the t-shirt guy and I ended up: The shirt cost $10. I offered $8. He said no.

Now, let’s assume something for a minute. If the guy pays $4 to get those shirts, and I offer $8, shouldn’t he take it? After all, he’s making money — $4 to be exact.

So why wouldn’t he take it? It makes no sense, right?

In the next few emails, I’d like to take you through the fascinating world of business. We’ll start at the farmers’ market, but we’re going to go up to multi-billion-dollar businesses, too.

How do CEOs make the decisions they make? How did IWT go from a simple blog to a multi-million-dollar business? What’s changed as I went from a blogger to CEO?

So many people think business is a bunch of arcane numbers and P/E ratios, but that’s not true. Business is strategy, competition, and psychology at the highest levels. If it works, it’s great. If it doesn’t, you go extinct.

Whether or not you run your own business, I’ll show you some fascinating insights into how businesses work — and how you can use their systems and psychology for your own life.

(If you run a business that generates between 6-7 figures, you’ll want to pay special attention. Send me an email if you do.)

For now, think about why that farmers’ market t-shirt guy rejected my offer for $8. Any ideas?

Leave your comment below.

P.S. We’re hiring a Marketing Operations Associate to join the IWT Team. If you have experience with troubleshooting and problem solving CRM and marketing automation systems, click here for more details. 100% remote, great benefits, and you’ll be working with a top notch team.

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197 Comments

 
  1. Jim C

    He didn’t accept your offer of $8 for a T-shirt because even though he would have made $4 on that t-shirt it would over time effectively lower the price of all of his shirt from $10 to $8 and erode his profit margin. As soon as you start to haggle and word gets out everyone wants a ‘deal’.

    He wanted to be Nordstrom’s not JC Penny

    • +1 — this reason… letting the lower price get out “erodes” your price.

      Plus, haggling on each item makes selling each item take more of his time. Number of shirts sold in 1 day = hours worked / average time to sell a shirt.

  2. Chris Horner

    I would say he wasn’t having any problem selling them for $10 so why lower the price for one small transaction? He believed in the shirt and the quality.

    Having said that, I would’ve countered with “If you buy 5 or more I’ll sell them for $8 each” just to see if you’d bite.

    • Ellot

      That’s a good thought regarding “if you buy 5…… It would have been up to Ramit to renegociate.

    • Ramit’s question, “Why did the vendor refuse my offer,” is not the most helpful question.

      The answer though, is, “Because he perceived, for whatever reason, that it was in his own better interest to decline your offer.”

      The more helpful question is, “What *would* cause the vendor to agree to sell to me.”

      But to find the answer may require some experimentation. As an example, I like Chris Horner’s suggestion, and I wonder what the vendor guy would have done with an offer of: “Sell me half a dozen, and I’ll pay $8.00 each.”

      In general, if the negotiation is solely about price then the way to break the deadlock is to break up the deal. There are two kinds of customers:

      (a) those who want to pay less (and receive less), or
      (b) those who are willing to pay more (and receive more).

      The best customers to look for, are those in the second category.

      What Ramit could have done, is to add something else into the deal (like purchasing five more shirts), and then the vendor could have said yes.

      How else could Ramit have altered the offer, so that the vendor would say yes? The only limitation would be Ramit’s own creativity:

      (i) I’ll buy this shirt for $10.00 … if you pay me $6.00 for this concert ticket that I can’t use anymore.

      (ii) I have a connection with a super supplier in the T-shirt industry. I’d like to buy this shirt and send it to her, and she may be able to give you a super deal on future business. Can we do that? How about if I pay you $8.00 for this shirt, and give you her name right now, and then I’ll follow up and make a formal introduction.

      (iii) You know, I used to sell T-shirts at a Farmer’s Market myself. Yeah, one of the biggest things I remember, is how sometimes I would just love to have an hour off in the middle of the shift. Do you ever feel that way, like when you have a couple of errands you really would like to do? Hmmm … listen, if you like, I’d be glad to run the booth for you for an hour and a half, so you could do anything else you have to do. You can stay for the first half-hour to make sure I got everything covered, and then I will be confident I can cover for you by myself for another hour. If that’s of interest, I’d be willing. Do you want any help?

      All of these are possible things Ramit could have said. What interests me, is when the vendor declined his offer, what *DID* Ramit say or do next?

      (I hope Ramit shares the rest of the story with us.)

    • Veronica Miler

      Wow, Hugh gave a very entertaining and enlightening answer. I enjoyed it, but I agree with Chris!

  3. Spokely

    He doesn’t want to play in the $8 sandbox. He probably doesn’t even want to play in the $10 sandbox and is designing a range of premium shirts as we speak. He certainly doesn’t want to waste energy and thought on bargaining.

    • That’s it !! The farmer probably subscribed to Ramit’s blog … And so he’s not going to lower his price on the way to being rich!

  4. Paulie

    He didn’t like you.

  5. He rejected your offer because he knew he would sell all of his product anyways. Why “give up” $2?

    • I think this is the most succinct, correct answer given the details.

      If Ramit doesn’t buy his shirt, someone else will come along and buy it for the price he wants. He has nothing to gain from lowering his price.

      He probably doesn’t bargain at all. Bargaining takes time and effort – much easier to say no and only sell to those who are willing to pay your price.

    • Krystian

      I agree with Jons. He didn’t care if you buy it or not. He will sell it for $10 anyway + maybe his principals.

  6. LeslieB

    Negotiating with you would lead other buyers to think that they could and should negotiate also and continue to undercut his profits. While some would say any paying customer is a good customer, you were apparently not the clientele he was looking for. That being one looking for a bargain.

  7. Tunde

    He doesn’t want you to cheapen what is already a commodity. Besides, he has other costs involved in getting the product displayed at the store other than $4 ‘production’ cost.

  8. It’s quite possible that he didn’t want to risk having to haggle w/more people if word got out that you talked him down $2/shirt. After all if he let’s one (Indian) guy negotiate w/him, he’ll have to let others negotiate too.

    Or, maybe he’s just a hard-@$$ who was in no mood for negotiations. $10/shirt take it or leave it. Period.

  9. Ingemar

    He didn’t want to dilute the value of his brand. Of course, if he thought that highly of his brand, he should have charged more.

    I also agree with Jons that he knew he’d be able to move product anyway. Highly sought-after items and services are priced higher to *reduce* demand and therefore not leave money on the table.

  10. He didn’t want to compromise his pricing. You give in once, it leads to giving in again.

    Also, there are other factors that go into pricing other than just the cost of the T-shirt. The man is putting food on the table, and has to determine what makes sense for him to stay in business. It’s not just making up the cost of the t-shirt, but also the cost of the stall, his time investment and the opportunity cost of sell shirts versus flipping burgers.

    If he sold it to you for $8 it could undermine his business when word got around. And his hidden costs might not be met for the $8 price.

    There’s a lot more that could be considered with ‘just 2 dollars’, but these are the points that I wanted to suggest.

  11. Brian Fletcher

    Two Words: Opportunity Cost.

    Assuming customer acquisition is not a problem for him, to sell a shirt at $8 instead of $10, given the limited inventory he had on hand for the farmer’s market, he is throwing away $2.

  12. David

    Watching his bottom line…maybe 2 for 16 would have worked? Fees at Farmer’s Markets can be steep. Also it’s easy to bargain and take less for something but then at the end of the day you see that your expenses are barely covered and you gave your profit away.

  13. Several possibilities
    1. He was offended by your offer (psychology)
    2. Didn’t even think about it, because negotiating isn’t in his experience
    3. He doesn’t need to discount them. Can easily sell for $10. Possibly can’t keep up with demand at $10, tho if this was so, he’d probably already have raised his price.
    4. Doesn’t want to devalue his product by selling for less than List Price
    5. He has a business plan for growth, which doesn’t include selling for less $$

    • The best comment – 5 succinct answers in one

    • EUNICE Dean

      He probably didn’t have any competition because he was selling T-shirts not watemelon at a farmer’s market. That helped his value perception too.

    • Gerald Brown Jr

      I would have to agree with this comment. Selling for less when he had an competitive advantage is a pooor business decision.

  14. He knows that a majority of his customer base is willing to pay $10 or more. There is no need for him to compromise when knowing this. He likely already has a min/max price established.

  15. He still has overhead to pay for, so the shirt alone may have cost him $4 but he still needs to cover the cost of market stall rental, transportation, etc. Plus, he needs to earn his own income to cover his living costs, so perhaps at $10 the margins are actually very slim. Perhaps negotiating him down to $8 is preventing him from earning a decent living wage.

  16. Ellot

    Maybe he just felt he would be losing if he accepted your offer. On the other hand if there was little chance of selling most of the shirts he was just a poor businessman. I like Christopher Horner’s (above) idea of the seller upping your offer to “if you buy 5 I’ll give you the $8 price. The seller could win by getting quick sales and you have the possibility of saying, how about 3 or something like that if you didn’t want that many shirts.

  17. Doc Kane

    Hi Ramit,

    Good stuff as always. My two cents: he didn’t reduce his price for all the reasons already outlined above. This’ll come across sounding terse in text, but what would you say if you were asked to offer one of your programs for less that what it’s currently being sold for? For less than what you believe it’s worth?

    Cheers,
    D

    • I saw someone try this with one of Ramit’s support staff to haggle down the price of a ZTL course. Ramit rejected his offer.

      And then unsubscribed him.

      Following Ramit’s behavior, the t-shirt vendor should have asked Ramit to leave immediately and never return (unless he used a different email address).

    • @Joel “(unless he used a different email address)”
      LOL

  18. Louraine

    He is an employee without authority to accept lesser price

  19. Michael

    You assume he paid $4 for the shirt. What if he paid $5 or $6? His margin is less, and you are asking him to take a 20% hit on his price. Also, does he print them himself? If so, he has his labor into the printing.
    I agree with other comments….he doesn’t want to “cheapen” his brand.
    Props to him.
    My wife is a jewelry artisan and we regular have to deal with the same situation. She puts a lot of labor, time and heart into her work. No need for her to take a big cut from her prices.

  20. Emily

    He knew you could afford it and didn’t want to lower his value.

    When does zero to launch begin??

  21. Delmania

    A number of factors.
    Did he have competition?
    Were there other vendors selling similar t-shirts?
    Were other people buying those t-shirts?
    On one hand, it could like set the pricing point good and didn’t need to negotiate.
    On the other, it could be he didn’t want to devalue his t-shirts by negotiating, he wanted that $10/unit price. In other words, you weren’t a part of his target market.

  22. If he accepted $8 then that becomes the baseline price for other buyers. Soon it then goes to $7 then $6 as the price erodes. Still making money? Yes. Lowering his margins to an unmanageable level over time? Yes.

  23. He was selling shirts at a farmers’ market for heavens sake.
    He should have offered you 2 shirts for 18 bucks.

  24. while I agree with many comments already posted my thought is also that he is loyal to his customers. If he’s taking $10 from other customers, why would he potentially hurt their trust in him by giving into one haggler? Taking $8 from you would tell his other customers (especially the loyal ones) that they are chumps for paying $10

  25. Muhammad Dewji

    I think it is a combination of a few things.

    1. Most people who walk in are unlikely to bargain (as an Indian even I don’t). He had confidence he could move his goods and a brand to protect.

    2. If he sold it to you for 8 and lost 2 dollars, and you brought your friends over who wanted it for 8, his profit margin would erode significantly. Then you would go and ask for a bulk discount and pretty soon he would end up selling them for $4.75.

    3. In all likelihood, he knew what his target market was, how he was selling to them and how much they are willing to pay. Ramit, this is exactly what you do when with your products and people buy =).

    4. Maybe he just didn’t like you. A lot of in person sales can be how someone “feels” about the customer. What they wear, and act like makes a huge difference.

  26. Tanya

    Because the shirt didn’t cost $4 really. Farmers Market prop had site fees, he has taxes, there is business licenses, if there are employees there are wages, social security and Medicare payments per head. He may have storage and/or shipping fees on the product. There may be tariffs if its shipped from over seas. Then there is taxes on inventory and assets every year, plus cost of doing business in our area governmental fees. That doesn’t even get into that he prob has to buy bulk to get his costs, which means a significant up front cost for every time he orders. So business owners are much less likely to haggle if they haven’t reached their break even point for each particular event (I promise you the All have one, I vended at many events)

  27. Adrian

    The t-shirt guy refused to bargain with you because he didn’t want to “position” himself (in your mind or anyone else’s mind) as that type of seller.

  28. Soroush

    You, Ramit, as a consumer which knows a little about clothing industry and the price they guy paid to buy that t-shirt, made an assumption based on a common assumption that these guys at least double their prices. So, you decided that the purchasing price was $4. Then you negotiated to pay a ‘fair price’, which again might just be fair to you.
    Now, when he sell you the t-shirt for $8 and everybody start to haggle and buy it for $8, his selling price would decrease. After a while, someone else like you would come and assume that his purchasing price must be around $2-3 because he’s selling for $8 now.
    See what happened here…!! After a while no one would buy because “THERE MUST BE SOMETHING WRONG WITH THIS T_SHIRT BECAUSE IT”S CHEAP!!”

  29. STEFAN

    1. He is not in business to make $4 a shirt. He knows how much he wants to make per shirt and if he doesn’t get paid the right price for his effort, then why bother?

    2. If he agrees to give you a discount, he is diluting his brand. What message does it send to you and your circle of influence if you are willing to discount your prices? Are you ripping everyone else off? Do you sell a cheap/inferior product at a premium price?

    3. If he sets a precedent for buckling, you may push harder to get a further discount on this items or on future sales.

    4. He knows you can afford the shirt and he is calling your bluff. (If you really can’t afford the shirt at $10, are you a customer who is going to buy more in the future)

    5. If you’re a tough negotiator with price, you’re probably going to come back in a week saying the shirt has shrunk after a wash/its fading etc. or find any reason to ask for a refund. You’re a shitty customer and he doesn’t need to work harder for less money.

  30. ingmar

    he believes that he is entitled to the right price. if you price it right you dont give discount. only if you overprice you give discount

  31. Chase

    He knows you’ll value the shirt more if you pay full price. And possibly then go and show off your awesome new shirt to all your friends. ;^P

  32. Ferrrnando

    Ima agree, you weren’t like. Farmer market is where people find deals & negotiate. The vender doesn’t know what he is doing.

  33. Question is, what was your response when he rejected you?

    If you walked away – his choice is binary: accept the $8 or reject. Many things could cause him to reject as people here have mentioned, including the relative discount $2 represents to his gross profit per shirt (could be 25% if the shirt cost $2 or 67% if the shirt cost 7).

    If you stay, there’s a chance you’ll still take it. So why accept less?

  34. As others have said: he’s trying to differentiate his product and not become the T-shirt haggler guy/Walmart parking lot T-shirt flogger from the trunk of his car. He wanted to maintain the prestige of his product brand: Fancy-Pants T-shirt guy from the Farmers’ Market. While probably a good idea, it’s pretty hard to differentiate T-shirts. Demand is going to be elastic. (yay! I learned something in micro-economics!)

  35. Steve

    Simply stated:
    Perceived value.

  36. wendy

    Maybe it cost him $8 already…(hand woven out of virgin alpaca wool by midnight etc)
    Maybe he hates haggling.(Is reminded about trips to Egypt or Morocco where you get hounded without a guide)
    Maybe he knew you had mega bucks and was insulted…I dont’ know, $10 for a cool brand new T shirt is already good value.

  37. Sir Mart

    A Farmer’s market is a closed intimate trading space where close people are watching the discount trade, I agree it’s better for the guy to reject your 8$ offer otherwise the people who have bought already the t-shirt for $10 will observe and feel cheated ! … and they will trash your reputation.
    If he were were selling ‘on-line’ though it’s all a private deal and no one knows, so acceptance of $8 would be a good move.
    Remember the ‘ Axis of Capitalism is SECRECY ‘ …. which is my personal mantra.

  38. Steve K

    Generally speaking I think this is a cultural issue…Americans I think are taken aback by someone who dares offer them a lower price for one of their own personal items (tshirt in this case) that is marked clearly for sale. It’s our American retail mindset…you walk into a store, pick out an item and the clerk rings it up at the price marked…Imagine going into an In and Out burger joint, ordering their biggest double decker burger, then trying to negotiate a better price at the register. Or going to Nordstrom, picking out an item and offering a lower price at the register. It’s just the way corporations have conditioned consumers here in U.S. and elsewhere….I think in lesser developed countries, and in this country before the refinement of the industrial revolution, it is/was easier to negotiate for retail items on the spot at the point of sale. Think “Moroccan casbah” vs. U.S. shopping mall….it’s just how we’ve been conditioned in this country….not to say you can’t negotiate at a Farmer’s Market! 🙂 Interesting discussion, though, thanks Ramit.

  39. Jermaine

    The vendor valued his shirts for more than $8. Or he wanted you to spend more.

  40. Patrick

    Hi Ramit

    I’ll offer you $8 for Zero To Launch, or Earn1K.
    Would you take that?
    If not, why not?
    🙂
    If you will: then I just gave you my email address, so please set up the deal. And will you let the other prospects know that you sold it to me for that?

    Patrick

  41. He didn’t have any two dollar bills for change.

  42. Um. I have worked Farmer’s Markets for years and my son now manages the booth I had. We sell shortbread cookies – flavored like Lemon Lavender, Almond, Choco Chip etc. They may only cost us a couple of bucks per package to make and we sell them at $5 each but I can tell you a great deal of work goes into bringing a product to market at a Farmer’s Market – creating the product and the cost of the product are just a part of it. I have offered deals to people – 3 packages for $14 and I have given cookies away but the bottom line is I would feel insulted. I’d move you along politely but I’d move you along. I’ve gone through the process of marking the cookies and if you don’t want them at my price then there are other booths. Most of the people at Farmer’s Markets work hard for their dollars. It’s a respect thing.

    • That’s an awesome response! I agree with you Pat. I think most people would feel insulted if they were offered less for something the worked hard to create and put out at a price they believe to be fair.

  43. He is being a top performer.
    He has done his homework, knows how much his competitors are priced, how much ‘most’ people are willing to pay – and hence he is not willing to budge.

    That said, someone earlier mentioned a negotiation tactic – ‘What if you buy 5 for $8 each?’
    Applying what you taught in FYDJ, I would say that might be something he might take up – if he has a ready list of ‘compromises’ he is willing to accept for dropping the price.

    Or if you would buy something else other than T-shirts from him.
    Or if you recommend X number more friends to him.

  44. Patrick Dunn

    A lot of comments seem to indicate that the vendor believed he was offering a good product at a fair price, and that he would have enough custom to move his product at that price. Fair enough – and quite possible true. It helps that his inventory is non-perishable, so the adjusted risk of losing a sale is bounded.

    Here’s another possibility: he didn’t have confidence in his negotiation skills. He felt that he needed time to research or plan his prices to avoid errors, and felt uncomfortable being put on the spot by an offer he didn’t prepare for. It’s possible that his caution was well founded, but it’s also possible that he failed to react to real-time intelligence about the state of the market.

  45. Karen

    Because he reckoned you’d buy it for $10 anyway if he didn’t give you the discount. Did you?

    I’m not good at haggling, and I remember one time I actually did it successfully because I wasn’t really bothered either way – I could take the blouse or leave it, and the seller could tell. Good sellers can read their customers.

  46. Maggie

    He recognized his customer – you – and realized his price was at the right price point. He was just starting out so he wanted to maximize profit by setting his price high.

  47. There’ really no way of knowing what that guy was thinking, but lets look at a few perspectives anyway. First, it could be a concept of sentimentality. If I put work into a produce and felt my actions in designing and presenting my goods to the world has a value $10, then I would struggle to believe others would see it only has a value less than what I perceived. For some it is hard to accept this even if it still generates a profit.
    More likely, I think the guy was just thrown by the negotiation. Ramit pretty much declares that he went right to his haggling roots in this post, which may have been (probably) too radical. American’s live in a culture where negotiations on lower prices is practically unheard of and (more imporatantly) unpracticed. We see a price of a product. We want the product. We accept the price. Or…we don’t and we accept that we will not be acquiring that product. We don’t try to talk down a cashier on the price of a pair of jeans, we just accept it. It’s just not part of our culture, but around the world, it’s a part of every day life. Don’t believe me? Take a trip to Mexico or Thailand or even India! Hit their markets and you will soon encounter that negotiation is everything! Ergo, this guy at the farmers market just wasn’t thinking the same way as Ramit. He wasn’t trying to make a sale, he was trying to qualify that his value of his product was higher (as represented by the all mighty dollar) than the value Ramit was offering.

    So who knows? The real question is who is right. What was the man at the market selling? Shirts or ego? Or was Ramit wrong to try and negotiate on what was considered fixed price? In the end, as related to what Ramit is trying to teach us, the shirt guy missed out on an opportunity to simply make money.

    • Kenny

      Going to a Farmer’s Market is nothing like shopping at Nordstrom’s or Old Navy. Most people go to Farmer’s Markets expecting to bargain. The guy saw you the week before and watched you bargain and knew $8 wasn’t your final offer. Figured you’d counter at $9 and he’d do the deal and pick up another buck.

  48. He was at the Farmer’s market to expand brand awareness (test) in a “new” distribution channel and already easily selling his product at $10 in his target market. He didn’t have to lower his price.

  49. vinay

    Cognitive dissonance…he does this on a regular basis. If he starts negotiating then he will be open to that all day. His average selling price will go up and down. Better to maintain a single rate that he knows will convert in better sales than to negotiate every order. Plus he would have been doing it so long that he would not have felt a pinch at letting a sale go.

    Though I’m sure he would have had a separate rate for say 5+ items .

  50. Alexandra

    Cultural differencies. In your blog post you said: “An Indian person is going to negotiate.” But the guy on the market was not an Indian, negotiating is not the way he does business. You did not meet on the common ground.

  51. Joyana

    If he appeals to people like us who always want a sale, he’s not getting a loyal clientele. People who will pay 10 without blinking will always buy those tees regardless. Whereas I’m not buying it until it’s half off!

  52. He works for somebody else where he is not allowed to negotiate.

  53. Kevin

    This isn’t a cultural issue, it is a human bias in thinking. Humans tend to focus on the perceived loss rather than the smaller gain, probably because at some point in our history it was advantageous to our survival. These momentary biases become problematic when we neglect to question them (do the math).

    So the t-shirt guy was probably interpreting your offer as a $2 loss, rather than a $4 profit, assuming that his cost is $4.

    Also, it is possible that his response was influenced by his thoughts about you, and whether or not you appeared to be an adversary or an ally.

  54. Lynne

    Assume he attended the farmer’s market with a strategy and a bottom line and a discount plan if he didn’t want to take the shirts home with him. Either you pitched below his bottom line or too early… Come back at the end of the day and offer $6.

  55. Ramit

    Before knowing you and your material I would have said that he should had taken the money since he is already making a profit, but through all your emails and free stuff you teach that we don´t have to make any discount or beg for someone to buy our stuff,

    Similarly the vendor thinks that if you are asking for a discount then you should go somewhere else to buy what you can afford.

  56. Elazar Weiner

    Its very simple. This is low volume retail. His customer’s buy on impulse while he is at the market only. Therefore to be sure that he can utilize any of the profits to pay his bills, he must earn more than double his investment per sale.
    Figure he payed $4 already for the tshirt. You gave him a $4 rebate to cover his costs and $4 to buy annother tshirt. So he actually doesn’t win in this situation.

  57. Ochreloca

    Because the value of his time was more than $4. Maybe he had added value to the t-shirt with printing, or maybe he just had to research, source, purchase and transport the goods and this was worth at least $4.

  58. Julie

    I learnt a few years ago that where you pitch your merchandise is very important. People go to markets to buy something cheap and cheerful. Maybe he priced his item at $10 to make a decent profit. On the other hand if he sold his t.shirts in another environment where the punters are in the higher wage bracket he would not have a problem. Years ago when I was selling hand made christmas crackers in England, I went to the local markets etc. to sell them, but got no takers. Thinking it through, I thought I am selling them in the wrong place. So I started selling them at private schools Christmas Fayre’s and country clubs festive events….had the ladies who lunch bashing each other to get to my stall….was inundated with orders!!

  59. Fran Pelzman Liscio

    Was it a really nice t shirt?
    What if it cost him $9 to make?
    Who knows? What if he was charging $20 apiece for the t shirt, would you be thrilled to get it for $10? We’re talking same t shirt.
    I don’t know why he didn’t take the offer. My guess is because it is crummy and annoying to stand in a farmers market all day with home made t shirts. People wander up to him and handle the stuff and walk away, make jokes in front of the seller like he’s not there, wander back, talk on their cell phones loudly while sitting on the stack of (probably mediocre) homemade t shirts that say something like “Upper Stanky’s Whole Earth Frisee and Butter Bean Farmer’s Market 2014” and still not buy one. A hipster Mom steers her Grandfather in a Korean War Vets cap to the t shirt guy’s only chair and says, “Here, sit here and talk to the T shirt guy while I shop.” Someone drops a latte. It splashes onto a t shirt and the person pretends they didn’t know and they bustle away.
    So if he’s going to actually sell one of these sad creatures he’s going to hold out for the $10. I don’t believe it is because he didn’t like you. You are likable and funny and would be fun to talk to, especially while negotiating. I think it is because he hates his life.

  60. Annette Vanderzon

    European parents are the same – med school or engineering. My father drove to see me once in four years – the one time I told him I’d decided not to go to medical school. Ha!

    I had a computer company in the early days – Americans never negotiated and almost everyone else did. I learned to raise the price the moment I heard an accent 🙂

    Best! Annette

    • Kenny

      We Americans don’t have an accent. Everyone else does.

  61. Brent

    Now Ramit… Having started a t-shirt company yourself, you know exactly why he didn’t budge on price. The margins are nowhere close to being that good. Brings to mind one of my favorite posts you’ve written, because I fell into the same trap once:

    http://www.iwillteachyoutoberich.com/blog/8-stupid-frat-boy-business-ideas/

    While there are a lot of “ifs” that go into figuring actual unit cost, the vendor was already pricing his merchandise too low. For that guy’s sake, I hope the farmers market booth was just an outlet to get rid of seconds and over-runs for a much larger wholesale business.

  62. He had already watched you unfold and read 30% of the shirts that he had on display. You made fun of the rest of them, and pointed out a spelling error on another. So he new that the shirt with an error was going to have to be significantly reduced. He was also irritated that he was selling lame products (the ones you made fun of), and he knew that re-folding the shirts that you unfolded was going to take 20 minutes, which equalled $3 of pay for one of his workers. That would really give you a $5 discount in his eyes. He didn’t want you to have a satisfactory experience – then come back and unfold more shirts, haggle more, only buy a shirt on discount again and give him a 2.5 star rating on SwapMeetYelp!. So not having you as a customer was more valuable to him than selling you one shirt at a discounted rate. Either it was this or it wasn’t.

  63. James McKernan

    Why that farmers’ market t-shirt guy rejected my offer for $8. Any ideas?

    Hello Ramit, Love your blog.

    An answer regarding your attempted tshirt purchase: The seller was afraid of moving the market in the buyer’s favor of $8 and perhaps further momentum downwards of less than $8.

    Thanks again for all your great material from a fan and customer,
    James Mckernan

  64. Pauly

    A couple of thoughts on the why:

    1. T-shirts are durable goods, so it’s not an issue of them going stale in the short term. So unless there was a specific purpose for the t-shirts (i.e., everybody wear them to the Royals game on Sunday) they would hold and could be sold another day. You might have had different success with something perishable – like veggies or meat or something along those lines.

    2. Supply vs (perceived) demand. If it was early then the perception by the seller might have been that he would see sufficient demand to sell all his t-shirts by the end of the day for $10 without a problem. Reality might have proven different, but perception is what matters at that point (especially since it’s an emotional thing).

    3. Perceived value. The same reason Minimum Advertised Price floors exist – maybe he didn’t want his product to be perceived as being only worth $8. Presumably he didn’t know you and didn’t know whether you’d go tell your friends you negotiated 20% off his t-shirts so they should, too. With that knowledge out there it’s harder to justify selling them for $10 (at least to someone who has that knowledge).

    Just a couple of thoughts…

  65. Lekan

    He didn’t take it for $8 because he believed his shirt is worth $10 and even though he was making double the shirt cost to make, he wanted more than that.

  66. Julia

    He’s not going to devalue his merchandise. I’ve had people ask me to give them a discount if they buy 3 of a labor intensive handmade item I used to sell at festivals. I’ve declined. It doesn’t take me less time, materials, or knowledge to make the third mandala you’re buying.

  67. Casey

    Simple. You are Asian. Its similar to USA’s policy to terrorists. Do not negotiate with Asians.

    On a more serious note, I play hard ball negotiation with Asians because I know they will play the game, on the other hand I always give my high price to the Asians and make em work for it to make us both happy. They get satisfaction from beating my price up, I get my usual price. Win, win.

  68. Simone

    He turned you down because it was 10am and not 4pm (right before the market closes ). Thus he wasn’t readily concerned about carrying all those unsold t-shirts back home. At 10am the projections of his profit for the day was high at 4pm the projections become reality.

  69. I would suggest that you didn’t take the time to build the rapport needed to persuade the seller into giving a 20% discount. When I sell items on eBay, I don’t want or need to know you. Make me a fair offer and I usually accept it.

    Face to face though, the right personality can pave the way. Coming across as a simple hustler can be insulting, and get in the way.

  70. Chris

    I imagine that the business owner had a vision of you telling 4 or more other people about your deal. They tell some others, etc.

    Plus, if he is selling a product you obviously want and it’s a decent price, why should he devalue himself (yes, himself) by lowering his price?

    He probably is a good entrepreneur who thought deeply about what he was doing and understood the value he was providing. Even though it was “just” T-shirts, he put value into it.

    Also, you weren’t the master negotiator you are now. In my mind, you would have improved the copy on his signage, color-schemed his stall so people could not look away, had him scientifically rehearse his pitch to a hypnotic level and had him start a t-shirt of the month club and blog in return for a box of the different shirts you wanted.

    I’m exaggerating to make a bad joke of course. Simply saying that today, you would have added value in your negotiation before he even knew you were asking for anything.

  71. Ramon

    It’s all about value perception. He sells his goods for what he feels they are valued at. By taking less, he does get money, but he immediately lowers the value of his goods, as other people have said in the comments. Also, there’s a strategy behind it. If he doesn’t negotiate with you, it puts YOU in the position of deciding what value the goods are to you. If you buy at the price, great! If not, then he’s weeded you out as a customer he doesn’t want to have, because you don’t place the same value on his goods / services as he does.

  72. Because like any good negotiation, it’s not over until you actually walk away (and walk away for good) from his offer.

    If he gives it to you for $8, now you just don’t think it’s worth $8 – you’ve managed to confirm that it’s worth $8. He can forget about you ever paying $10 for another t-shirt.

  73. Jeremy

    He probably has a whole bunch of other costs that you didn’t know about such as renting the space to sell his t-shirts… at $10 he only needs to sell 15 shirts that day but at 8 he would need to sell 19 of them, that’s harder to do.

  74. Rajavanya

    1) If he lowers the price on bargaining, it shows he doesn’t have integrity. And he doesn’t want to come across as a guy who runs a business without integrity.

  75. 1) Didn’t want to set a precedent
    2) Knew from experience he could sell his entire stock at $10

  76. He’s applying the retail equivalent of the “stand your ground” gun law.

  77. peachfront

    I don’t want that haggling energy in my booth. I’m not going to give a lower price to the haggler and encourage more of that. I’m in North America. I believe in equality. The price is the price. The same to everyone. You don’t get a cheaper price for acting like a jerk. It’s my experience that people who haggle here have something wrong with them — they’re neurotically cheap, they’re looking for something for nothing, they’re lonely hearts trying to drag out the connection too long, or whatever. Who cares?. I’m not going to reward that. Why should the nice problem-free customer pay a higher price than the jerk I don’t even want anywhere near my booth? It doesn’t make any sense to attract that kind of business. Even if I knew for a fact that somebody’s dad raised them like that, it isn’t my problem. Take the haggle somewhere more appropriate. I can’t say for sure that’s what your booth guy was thinking but it’s sure what I think when I’m manning the booth. I’m glad you overcame that haggling instinct, Ramit. It’s really one of the most unattractive things a man can do.

  78. Isabelle

    A lot of good comments here and many different plausible explanations.

    If he says yes to $8, then offering a t-shirt for $10 only to get haggled down and accepting it will be the new standard. The seller saw himself as a $10 t-shirt seller. “Just this once” would make “only on a bad sales day” and then turn to “not every day”. It would change his perception of himself. Instead he stuck to his standard. And it wasn’t just about his own perception of himself. I’m guessing there might be other t-shirt sellers at the market or at least other vendors. When they realize that he can’t stick to his prices then he becomes “that $8 t-shirt guy” who can’t run his business properly. How will that change how they treat him? And how will that feed the spiral downwards of how he thinks of himself and his business? Better stick to his price and wprk on selling something of higher value or increasing revenue per customer.

  79. Isabel machado

    He believes he has a great product and will have no probem selling it to the right person. The same way you want only people with no debt to join iwt. My opinion is wouldn’t you want me to advertise a succesful, great product? You would if you believe i would succeed in making you more money!! I love reading your materials

  80. Kristine

    Remember the old joke about “would you sleep with me for a dollar? No? How about a million dollars? Yes? Ok, now that I know you can brought,let’s figure out the price.”

    The Indian guy knew he had a “live” one- culturally, bartering is what people do in India. If you take the initial price, you lose the respect and the opportunity. In selling/business, you have to know your market; intuitively relate.

    In my humble opinion, anyway.

  81. gerard

    I’ve been through similar situations with my products. At conventions I usually price my items higher because I offer a different type of design on a better product. Usually on the last day I get a few people trying to haggle, but I usually stand firm, because I believe in my product and I usually sell out due to the way I market it.

  82. Cristina

    Bigger picture? You assumed he is getting the t-shirt made for $4.00 and will make a profit at $8.00. In reality, cost and overhead may put him right at $8.00. (No….he doesn’t want to ‘give it away’) Selling them for $10.00 gives him a $2.00 profit and he is keeping the price low at $10.00 in order to sell in bulk. He is going on the Walmart theory of selling them cheaply so he can sell a ton in order to make a profit. Most “unique t-shirts” sold at markets I’ve been to are $15-$25 each…..he is under priced! I think he would be smarter to mark them all $15.00 and then have a SALE for $10.00 each! Personally I tend to buy MORE when I think I’m getting a deal. Being under priced at $10.00 firm, does not give him any wiggle room to haggle the price or offer a sale. Psychology of a perceived “good deal” will sell the shirts!

  83. Marina

    I’m curious about what the “a lot of back-and-forth” consisted of – you didn’t specify. Did he come down on the price at all? Did you talk about the quality of the item? How busy was the stall? What time of day was it?
    From the vague description, I can guess at a few vague possibilities:

    1. He was turned off by the aggressiveness. I’m selling all of my stuff in preparation for my move to California and I’ve gotten turned off by people pawing through my stuff, and also by some ridiculously lowball offers. In other words: cultural and/or psychological mismatch

    2. As others stated, could be costs, could be lowering perceived value

    3. Back to #1 (psychology): did you admire the shirt? Did you regretfully say that you can’t afford it? Or did you devalue it verbally trying to lower its perceived value? The latter strategy may make sense for something impersonal, but could seriously backfire for an item that the person made.

  84. Tricia

    As an independent illustrator, I’ve dealt with people wanting to negotiate prices down at conventions. I’ve accepted on only one occasion, because 1) it wasn’t negotiation; he was fully ready to pay full price for a piece and simply didn’t bring enough money at the time, and 2) based on our conversation, I knew that person would be back next time more prepared. Sure enough, he came back the following year and commissioned original artwork for full price, and even tipped after that. I gambled on the connection and it paid off in the end.

    But for the people who want to negotiate $10 prints down to $8 or even $5. Allowing them to tell me how to price my product devalues everything I’ve worked for. If they don’t want to pay the extra $2 for a piece, then clearly it’s not for them, and I wouldn’t want their continued business anyway.

    The same goes for the man at the farmer’s market. He has set his price for a reason, and technically it’s none of our business what his overhead costs are to produce his t-shirts. Because you’re not paying for just a shirt – you’re paying for the work that went into it. Those who negotiate don’t understand that, and the last thing he wants to do is open business to those kind of people.

  85. One possibility is he was not the owner, therefore not in a position to sell at a discount.

    Another is simply not recognizing the old adage of a “A bird in the hand is worth two in the bush!” In other words, if he had a run of buyers stampeeding to his stall to buy T-shirts for $2 off and sold more than he would have at $10, he would have had more cash in his pocket than holding out for the extra $2.

    Everyone wants a deal! It’s the locked mind that is inflexible and passes up great opportunities!

    We constantly see this in retailing, where a major retailer has a new dress style at $200, and within 4 months it’s 70% off. They sell far more at the discounted price than when at full retail.

    Many countries are geared to barter as a part of their culture, and look forward to the haggle! Other cultures have been conditioned NOT to haggle, but the discounts are still there when someone has the audacity to ask!

  86. Nancy

    Maybe, like you, he was running a test. “Say no to all discounts” and see if he makes more money. Why would he give you a discount? It’s not like you were a good customer, but it never hurts to ask.

  87. Oh, please! Cut all the logical economics out of it. Yes, they make perfect sense, but this is pure psychology…the guy did not accept to sell at $8 because lowering the price would mean:
    a) his sales skills were not good enough if he couldn’t sell it for $10, or
    b) he had to accept to have made a bad pricing decision, or
    c) for whatever reason he linked his personal value to $10 and to lower it would mean lowering the way he valued himself.

  88. Matthew Heath

    He doesn’t need to sell it to you for $8 when he’ll have XXXX many more customers willing to pay $10+ for a t-shirt (depending on branding/marketing positioning). I do that already: you want a discount? No thanks, I already have people who are happy to pay the full price for my products.

    It’s just good business sense.

  89. He knew you liked the shirt and could tell you were going to pay $10 for it anyway.

    Also, all the reasons already stated above.

  90. Liz H. Alexander

    He has to make money enough to both cover the costs of producing the shirts while also making a profit for himself.

  91. Sahil Ramchandani

    If he sold it to you for $8 he knew that he was setting a precedent from that moment on. He is accepting that he will now attract more customers that are only willing to pay $8 and not the premium. Those are the types of customers he would get from then on. Like another comment said, he’ll go from Nordstrom to JC Penny.

  92. Randy Martin

    I would say he rejected that offer because his shirts may have cost $4, but he has a lot of other costs to cover like paying for the booth, his time at the event and preparing and transporting his stock to the event, coordinating the printing and coming up with the ideas for the shirts in the first place. He’s invested a lot of time, energy and money to bring these shirts to market.

  93. Possible he was just working for someone else and had. no authority to negotiate

  94. He did not want to be bullied plain and simple. Some “smart” ass comes in and asks for a discounted price then argues with the seller he still makes money is annoying and childish.

  95. To me the most common reasons (in no particular order) and assuming that he did in fact have authority to negotiate.

    1. Wrong time of day. If it was the start of the day he probably figured he would be able to sell it eventually at full price. If it was the end of the day he would have a different mindset of “Well one less shirt to lug home and another $4 in my pocket”

    2. He didn’t believe you were a serious buyer just one of those hobbyist hagglers that hang around flea markets just for the fun of negotiating and sharpening their skills for what they really do want.

    3. Other potential buyers were within earshot and he was afraid it would embolden them to haggle.

  96. He rejected you because if he give it to you at $8 he has to give it to the next guy for $8. then the next indian guy negotiating for $7. eventually he will be selling them at cost. which is not good business. lol

  97. Jessica

    Selling the shirt to you for $8 erodes his margins, signals that he doesn’t value his products at the price he is selling them for, and sets a precedent that may invite more people to negotiate with him and create a situation where he’s pressured to sell to more people at a lower price.

    He’s done the math. He knows what to sell the shirts for. And good for him! A lot of my clients struggle with the concept of pricing, justifying low prices by saying “any revenue is good, right?” This is an awful and self-destructive way of looking at pricing. I know this so well because I used to do it, too.

    At least now I can look back and laugh about it, since I changed the habit before my business tanked.

    But seriously, DID YOU BUY THE SHIRT.

  98. Maude

    Hi Ramit,

    You’re not a preferred customer, he doesn’t know you. And if you were actually a representative with an interest in buying bulk, you’d have said so.

    It’s a market in the US, and there’s not much haggling to my knowledge, so it’s not in his interest.

    Word of mouth, you might bring him other hagglers.

    He doesn’t need to haggle because business is ok and even if he’s failing, he won’t show you.

    For measly T-shirt, well, he still had to order them, take care of logistics and get them there.

    They won’t spoil 😉

    Conclusion, next time you pass by his stall and eye T-shirts, you’ll stop when you’re a buying customer, which is his goal!

    Personally, I’ve had to set my boundaries with haggling, and I’ll budge only if it leads to what I need. Cuts are for the very needy, and then I’ll offer perhaps before they ask, and we all feel good.

  99. Ron Goss

    I would say that if the shirts are selling well at $10, there is no reason to take less for the shirt because he would lose the other $2 profit that the next person would probably pay. Profit margins are higher at $10 than at $8.

  100. Zain R

    It could be because he was worried about other people trying to negotiate with him as well and he didn’t want to deal with the cost/time of negotiating with others.

    Or it’s just cuz he’s not Asian.

    The guy grew up in America where you never negotiate for anything (other than a car). If you go to Home Depot and try negotiating for something you’ll get laughed out of the store.

    The guy’s mental model of the world says “You don’t negotiate with customers, that just doesn’t make sense.” So he didn’t.

  101. He has to set strong boundaries in order to establish his business. And has to stay firm in his personal belief that his t-shirts are worth the $10 price. If he is swayed even slightly by a random person looking for a deal then it a good indication that his business will suffer down the line due to uncertainty of the worth of his product.

  102. Nathan Moorby

    It devalues the product. And everybody would want it at that price that day.

  103. Haggling is usually back and forth multiple times. You made 1 offer, he rejected it, and you quit.
    That doesn’t sound like haggling.

    Like others have posted, all you offered was a discount on 1 shirt. There’s multiple problems with that for the vendor, as mentioned, and no real benefit – especially for a long-term business (he probably comes to the farmer’s market every week).

  104. Geoff

    The man at the farmers market has a limited number of shirts to supply at the farmers market. He determined the market value and demand for these shirts and set price at $10. If demand wasn’t as great or he had more supply the $8 offer might have been considered.

  105. Patrick

    Because he believes in the value that his shirt offers and knows that they will sell at $10. No long term benefit to sell at $8.

  106. Greg / Quiet Entertainer

    I emailed this but wanted to post this here in case people want to chime in: My guess to why he rejected the 8. He has a set amount that he wants to make per shirt? Or he thinks his shirt is better than the $8 shirt next door? I’m basically echoing one of the above comments about perceived value.

    I’m a musician about to go on tour and I’ll be selling CDs & t-shirts.

    I’ll sell 1 CD for $10 and a 4 CD bundle for $20. CDs cost me about $3 each to make.

    Additionally, the music can all be downloaded for free on bandcamp. So why negotiate on the physical price?

    Ramit, I feel like it’s the same thing you do by refusing to sell your courses to certain people or by refusing to give people deals on your material when they ask. right?

  107. This happens to me and my business all the time and I never do it. Why? Because though I may make money in that one instance, once other customers find out it will devalue the service that I offer. Plus people are already willing to pay what I’m asking so I should I lower my price. My competition seems to be growing a lot in the last few years but they seem to price their service is a lot lower or be more willing to negotiate. It hasn’t affected my business though. With profit margins how they are I don’t see how they can continue to do that in the long term and still maintain success. Used to be worried about our higher price point but now I see it as a competitive advantage. Higher profits means that we have a lot left over to reinvest in the business and growth. Competition not so much.

    • I should add I don’t lower my price because of how I want my service to be perceived. As a premium rather than a discount product.

  108. Hannah

    Choosing to engage in price discrimination (using economic terms) is something that a lot of “simple” business models can’t easily do, in particular if they haven’t developed systematic upgrades for people who try to haggle down.

    With a set price of $10, the t-shirt stall guy can’t get $25 from people who want a premium t-shirt experience. Thus, he can’t profitably absorb the $8 dollar t-shirt guy or the $6 dollar t-shirt guy.

    He could have offered you a T-Shirt and a Bracelet for $11, or he could do two t-shirts for $17, but I think it’s important to never accept less revenue than your minimum advertised price.

  109. -Could have felt offended that, in his mind, you were telling him he didn’t know how to price his product or that it wasn’t worth the amount he was asking. We’re a prideful bunch.
    -Also, as many mentioned, if he had plenty of other customers willing to pay full price, no need to take a cut. For example, my buddy is an amazing tattoo artist, booked over 7 months out. He would have absolutely no reason to negotiate a lower price when he knows how valuable he is to so many others.
    -Maybe he was selling them for someone else and didn’t feel like he had the authority to take less.

  110. Tracy

    I have been a market vendor (Portland Saturday Market), selling a handmade product. A lot of thought goes in to determining product price … not just cost and overhead and wage considerations, but also market value, plus a profit margin that supports company growth. Finding that sweet spot is both an art and a science.

    Every customer conversation is an opportunity to compile valuable data on my product’s appeal and perceived value which will inform the decisions I make for the company. Is my product viable at the price I need to ask in order to cover costs and make enough profit to grow the business? If Ramit is one of many customers offering to pay less for my product (or, more likely, engaging with my product then walking away after assessing the price without any conversation or negotiation), then it is a trigger for me to look at my product and business model as a whole. If he’s just one of a few looking for a bargain, it’s critical to remain confident in the value of my product and not agree to reduce the price in order to make one more sale. There’s no room for desperation in small business.

    There are many unique offers one could entertain that fall into the ‘negotiate for a lower price’ category, and they should be considered. But “I’ll give you less” isn’t one of them.

    Finally, if you’re a vendor, you should already have pricing posted for quantity discounts. That’s incentive.

  111. Rob Richards

    He could have been fixated on price, believed that if he started taking $8 for the shirt that everyone would stop wanting to pay 10 or maybe he had other overhead so he wasn’t making money at $8.

  112. If he has many customers that buy at 10, he would not sell at 8.but if he starts getting t-shirts piled up and not sold , he will probably sell for less in the future

  113. Franklin

    Answer 1: When there are possibilities of getting $6 profit, why would he need to settle for less.

    Answer 2: The other reason may be, as Ramit said, “its like letting a dog loose with 500lbs. of meat”. There is some peculiarity i guess, one it is a farmers market and he is the only guy selling T-Shirts among others selling their farm produce. psychologically the T-shirt seller is confident that no one has the product around him what he is selling. He stands out in the crowd, people notice him as the T-Shirt seller in farmers market, and once customers remark his product is good, this would pull crowd to the stall.

  114. Linda

    He doesn’t want to be treated any different than a brick and mortar store. I’m a metal smith and sell my wares at art fairs. I hate it when people haggle with me. When they are in Norstrom’s or even JC Penney’s do they ask the sales associate, “If I buy five pairs of jeans, do I get a discount?” NO, they don’t, so why ask a smaller entrepreneur that question?

  115. My take on why he rejected your $8 offer: could it be because in that situation, you were the “random critic” trying to tell the business (farmers market guy) what they “should” do without knowing the full story? Sure, he makes a $4 profit from your $8 offer. But his price is $10. So, why should he take a $4 profit when he can make a $6?

  116. Perhaps he believed more in quailty than quantity. He figured he’d better selling fewer shirts at a higher price then more shirts at a lower price. It also could of been he was insulted that you wouldn’t be willing to pay $2 more dollars for a shirt which ruined your creditability with him and thus didn’t want to bother with you. $10 is already pretty cheap for a shirt.

  117. A few possibilities (based on the situation);
    1 – If there was any other potential buyers around, he may have been worried about setting a bad precedent, with everyone else expecting a discount “because you gave one to that guy”
    2 – He may have expected you to give in and pay the full price if he rejected the lower offer
    3 – He may sell all of his inventory regularly and didn’t see the need to accept less
    4 – He may have equated the price with the value of his work and saw the lower offer as insulting
    5 – He may not have a good grasp of fixed vs.. variable costs and based the $10 on covering both.
    6 – He may have just had a bad day.

  118. He’s an idiot and should have taken the $4 dollar profit, because even though it’s a smaller margin he’s gaining a customer! Maybe if you liked the shirts enough and want to provide a store front for your employees and offer him an opportunity to grow his business or any number of opportunitys you as a satisfied customer could bring, and he would have lost out over 2 freakin dollars!

  119. Mechele

    He did not take your offer for one simple reason..your offer of $4 was an insult when the shirt is worth $10. Had you said ” the shirt is worth $10 would u take $6. He would have taken it. When someone feels insulted during a negotiation they will not sell for less.

  120. Martina

    He did not sell it to you for $8 because he had not worked out a series of prices and margins that gives him plenty of room to happily sell at $8, even at $6 even though his price tag says $10: Being a happy seller and making a happy customer is the best way to be and feel successful.

  121. Steph

    Or he could just hate hagglers. In a culture where haggling is normal, the listed price reflects that. In Australia (and I’m assuming America) the price doesn’t leave that kind of space.
    A number of years ago an Indian gentleman approach my father and I to buy my car, which we were NOT planning to sell. We suggested a price and he started haggling. I was straight up p*** off. This guy was interrupting my time with my father to squabble over $50 when I didn’t invite him into my life in the first place. That sort of arrogance has inoculated me against giving anything in an (usually unwanted) negotiation.

  122. The T-Shirt Ramit wanted to buy was the one the seller was wearing. It had sentimental value that was worth more than $8

  123. Alberto

    He was confident he could eventually sell all the shirts at $10, so selling one for $8 would have ended up costing him $2.

  124. Pattie

    If you go to a department store and see a price tag on a t-shirt that says $10, do you go to the checkout and try to negotiate the price? This is from a multi-million dollar corporation.
    A t-shirt stall at a market is a local person trying to make a living. The price of the t-shirt says $10. Why are you trying to negotiate with them but not a department store? Why are you trying to pay less to a local man just trying to make ends meet than a place that pockets millions of dollars every year?

  125. Josh K

    It should be said that you have no idea how much he paid per shirt. Maybe $6? Maybe 8$?

    Regardless, I think people resort to their gut instincts first. Immediate reaction: “I can’t sell for $8 to everyone, so no.”

    Or maybe “It’s hot and been a long day. Who the hell does this guy think he is offering $8? No. ”

    Or maybe he just knew the value of his product. “If you’re not willing to pay $10 that’s fine, but you’re not the kind of customer I’m after. Adios. “

  126. Susan

    Probably refused the $8 “on principal” . . . . his t-shirts sell for $10, they’re worth it and, damn it, if he sold all his t-shirts for $8 his profitability would drop by 33%. Then again maybe the guy just didn’t want to negotiate with some “foreigner” . . . . sadly no law against assholes in this world.

  127. Ridwan

    Hmm by selling it for $8 it would lower the perceived value of the shirts, and could open the door for more people to start asking for $8 shirts once they found out he was willing go negotiate

  128. Scott

    He rejected the $8 offer for two reasons. First, for you to be a satisfied customer (and he wants you to be satisfied), he needs you to pay a fair price. Pay too low and you do not value the item bought. Secondly, in the rule book of negotiation, he has to reject the $8 because of the need for a win-win. He can only counter with $9 after he has rejected the $8. If you then accept the $9, you still win because you have got him from $10 to $9. He still wins because he has shown you that he values his product enough to not take the original offer. And you still win because the item still holds value to you (if he had accepted the $8, the first thing you would have thought is…should I have had a lower first offer. The second thing you would have thought is…are these shirts worth anything).

  129. Victor

    He didn’t accept your offer because you gave him no reason to say yes. Kind of like asking your boss for a raise just because you’ve been there a long time. It’s too easy to just flat out say “no” with no consequence.

    If instead you offered cash for 2, (which would save him some card processing fees) or maybe demanded a discount for a flawed shirt, he would’ve relented.

    Negotiation means win-win and you didn’t give a win to the shirt guy.

  130. Jason ,Lachenmyer

    You didn’t offer him an incentive to negotiate. There is no personal relationship. You most likely will never buy from him again. You’re only buying one.

  131. Vicki

    There were hidden costs besides just production of the shirts. There is the rent he has to pay the farmer’s market for use of the stall, fuel for his vehicle to take the merchandise to market every week, and maybe he even has to eat the cost of shirts that seemed like good concepts at the time he had them printed off, but turned out to be less than hot sellers. All that has to be factored into the cost of the shirt. Maybe it actually cost him $8 and he has a small $2 margin at the $10 price. Maybe $8 is the price he charges to his wholesale customers, so he can’t in good conscience sell it at retail for that, as he might be competing with his own best business partners. Could be a lot of hidden reasons.

  132. ShirleyN

    One of two theories: t-shirt seller does not want to haggle or spend time with each customer supposedly the t-shirts sell themselves. Or because the price is so low, offering them for a lower price to those who do haggle will lower the profit margin as well the perceived value of an already cheap t-shirt.

  133. Steff

    He’s selling t-shirts at a farmers market. He’s not thinking about long-term sales, growth, or any other conference room type planning. He’s thinking about each individual sale. Probably wouldn’t even be back the next week because he didn’t want to shell out the extra cash he made to make more t-shirts.

  134. Roman

    He probably didn’t sell it to you because it’s more trouble than its worth. Someone comes in, buys a shirt for $10, they’re satisfied, he’s satisfied, end of the transaction. Now, someone comes in, haggle the price down, he agrees, and now the person is more likely to come back and complain or return the shirt.

    In my experience, people who don’t appreciate your business and try to haggle prices are not worth the trouble. It touches on something Ramit said not long ago about not dealing with people who want to pay bottom dollar for your product/services. It’s like being a waiter at Cheddar’s. It’s super cheap food, but the people there will run you ragged and try to get their meal comped for even the slightest of inconveniences.

  135. David

    Ramit,

    I’m assuming the guy sells shirts there fairly often, so he knows what people will pay for them. Another student already mentioned that his prices would diminish alot over time if he did this on a regular basis. He had confidence that another person would come along that would be willing to pay the price

  136. J. B. Rainsberger

    If I don’t *need* to sell you at a lower price, then I won’t. If I believe that I can sell all my inventory at the price I want to get, then I won’t sell to you at a lower price just because I still make a profit. Finally, if I think I can get *you* to pay full price, then I won’t offer you a discount.

    Depending on the situation, I might not want word to get around that you can talk me down on price, but at a farmer’s market, I’m not sure how big a risk that is.

  137. Andy DSilva

    Let’s assume he was thinking of opportunity costs etc.. but I doubt it.

    What we have here is a clash of cultures!

    I remember my mom (fresh in Canada with me) negotiating at a mall for a 10% discount not understanding why this was so difficult cos she was aiming for 50%.

    I stood on watching the comedy. Watching the Manager cringe, almost embarrassed to punch it in.

    Quite possibly if word got out to the Indian community that there was a 20% off t-shirts at this farmers market store that it would be the new starting point for additional discounts. A CHALLENGE to get the best price or even get a 2-for-1 deal.

    Soon he’d be out of business all because of the clash of two cultures.

    Btw, where is this farmers market? I think I could negotiate better 🙂

  138. As a former individual that was the farmer at the farmer market, I would say if you wanted to negotiate you should have done so with something that would spoil.

    You want a box of tomatoes 1/2 off ok, 10 cents per pound discount on the watermelon all right, sack of spuds for a discount, we can talk,

    but why would I sell a T-shirt that does not spoil for anything less than the stated price? If I don’t sell today, I will just bring it back next week and try to sell it again. So, T-shirts are $10 and Hats $5.

    I am sure we have a box of them around somewhere…..

  139. Janice

    I think you pissed him off, Ramit! I really like EM’s answer because it covers all the (5) bases, but one of the things some people like about being in business for themselves is being able to NOT do business with obnoxious folks. So the first thing that came to my mind with your question was that he made a snap judgment that he did not like you and would not give you that price even if hell froze over!

    Of course my answer says much more about me than it ever does about you or that vendor!!!

  140. Keith

    Supply and demand.

  141. Price integrity

  142. I hesitate to comment since he has the same business philosophy exactly like you. He rather spend his time dealing with 20% of the people who give him the 80% profit rather than people who love to bargain with them and make them measly profit.

  143. Elaine

    Quite simply, you are not his target customer.

    Once I use a coupon code at an online shop, I will never purchase anything there ever again full price. The perceived value has been forever lowered in my eyes. Perhaps this is a store who doesn’t want or NEED those types of customers. Building a core customer base who shares the same value as the customer is crucially important in any business, no matter how simple a business is.

  144. Robert

    Interesting comments. I don’t know that I have anything to add to them, but here is a link to an interesting video about who we choose to haggle with. It’s staged but raises an interesting point.

    https://www.facebook.com/ActorVarun/videos/vb.110283932385165/845165165563701/?type=1&theater

  145. Antonio

    Quite often there’s a correlation between price and quality. Lower price, lower quality – even when this is not always true, it is true in most people’s mind. In other words, he would be discounting the perceived value of his product by accepting the $8.00.
    On the other hand, he could have offered Ramit, a lower quality item for the same $8.00. Kind of like the idea of not giving discounts but giving the option of doing or giving less when the amount of money offered is not enough.

  146. Lorne

    Love all the answers. I think I saw most of my most plausible answers already stated, however maybe his price was tied into his inventory control, especially if his final total was under scrutiny of a higher manager (in this case, perhaps his wife..lol). If he made $300 he or a higher manager knew he sold 30 shirts. If he made $298 he might have had problems justifying it. Especially if he was lousy at math.

  147. If you’re haggling for t-shirts at a farmer’s market, you’re not this guy’s customer.
    Simply put, if price is the most important thing to you (in this transaction), you could get Hanes in a pack for much less.

    Now, let’s assume something for a minute. If the guy pays $4 to get those shirts, and I offer $8, shouldn’t he take it? After all, he’s making money — $4 to be exact.
    Perhaps the margin reduction is unacceptable. With your offer, he goes from a profit margin of 2/3 to 1/2. And you said he pays $4 to get the shirts, which doesn’t include additional incremental costs to sell it at the farmer’s market. Before I worked in a retail business and before I started watching Shark Tank, 1/2 would have sounded great. The most profitable commodity that turned over quickly was marked up 30 %; the most profitable commodity was marked up 50%. It wasn’t nearly enough to make up for the expenses. The investors on the Shark Tank hiss at proposals for products that only sell for twice what they cost to sell and make.

    Now he could take a bath on a deal in hopes of getting more business. This was a one-off so he got no further benefit. If it wasn’t, he would expect that you’d bring customers like yourself, the kind who haggle over t-shirts at a farmer’s market, low revenue, demanding, without any idea if the volume would be enough to compensate.

  148. Leslie

    The man @ the Flea Market simply placed value on himself by sticking 2 his guns about selling the tee for
    $10-

  149. Aparna

    The obvious answer is that the additional $2 per shirt would add up in the long run. I live in Singapore and here the mentality is very much “You take 50cents and you make another 50 cents and you get ONE DORRA” (Russel Peters style).
    But maybe its also because if he starts settling $10 shirts for $8, he’s gonna attract a customer base who will come ready to bargain the price down even further. His brand value would talk – from the shop where you get great $10 shirts, to the shop that sells really cheap t-shirts.

    • Alfred

      People will always try to bargain. The seller will only agree to a deal when he feels he has either won a negotiation or achieved a win for both parties. That win could be achieved in almost any way including financially or empathetically

  150. Sybil

    The seller failed to build in some wiggle room in the initial price. People who haggle pad the price.
    The scenario I imagine, because I’m an Optimist: he sells the shirts at the Farmer’s Market with the price un-padded, BUT..wait for it..he sells the same shirts (if he’s smart) in upscale markets for much more, and moves the older inventory cheaply through the humbler market.

  151. Evans

    I think the T-Shirt seller had been selling the products at a higher price, that means he wasn’t willing to lose the 2$, and why should he lose that amount?..if he sells two t-shirts at a price of 8$ instead of 10$, he would have lost 4$, the cost price of 1 T-Shirt…

  152. Alfred

    Because at the time of your offer there was it was a win/lose situation with you winning a deal on a shirt and him losing on profit. Specially since you walked in assuming he would give you the shirt at a loss without any investment. With the right deal and a change from win/lose to win/win where both parties win; then I would guarantee you could have gotten the shirt for $8.

  153. Moranodi

    the vendor did not want to bargain as he was already at a bargain place. How much are t-shirts in the USA by the way?

  154. Hiral

    He is selling t-shirt in farmer market. So what a daring!. He is rejecting you too sold in $8 it means he knows or experienced there are high chances of sell.

  155. Angela

    These are NOT the reasons he didn’t go down to the price you ASSUMED to be fair: A) It is not that you hit on a raw nerve of his by trying to negotiate price, B) I don’t believe it is because it was to early in the day to go down on the price yet. C) If he was NOT in a position to authorize a price reduction, 1-) he could always call a manager/someone that CAN authorize it. 2-) put the shirt(s) you want for $8.00 ea. in another place until he could ask about your “Negotiation offer” to someone that can, so they can contact & “dicker” with you themselves 3-)ask you to come back when another vendor is working. That said, I think he is the owner, salesman & the only employee of that T-Shirt business (that he is just starting out) & he was unable to negotiate on prices with you or ANYONE else due to the expenses he had to pay up front to get the T-Shirts & print. Then pay shipping & handling. But IF they were done locally or if he did the printing himself, He still had to buy ALL of the materials & take the time to get the completed product along with any type of advertising & display racks/tables etc. Then the transportation costs to get to a decent location that attract people. That is my theory of Why you were unsuccessful in your attempt to pay $8.00 each for them. But I also think that you were able to get some type of discount on them if you agreed to a stipulation of some sort. If you agreed to help him advertise his business by using the “Word of mouth” technique. Or something else that would benefit get his business bring in more customers at some point.

  156. Abhishek

    It’s about his psychology and opportunity cost. He believes his product is worth 10$, knows he’ll sell all his Tshirts for that amount, so why would he let the $2 go. His believes in the value he’s creating and that’s more important than haggling for 2$.

  157. Martin

    In the blog post Ramit wrote:

    “You see how easy it is for random critics to tell businesses what they “should” do…without knowing the full story?”
    “Now, let’s assume something for a minute. If the guy pays $4 to get those shirts, and I offer $8, shouldn’t he take it? After all, he’s making money — $4 to be exact.”

    If the guy is successful at selling the shirts for $10 then there is no reason for him to lower the price to $8. We don’t know the full story.

  158. Andrew

    I would have pulled out $8 and say to him here’s 8 dollars take it or leave.

    People normally will accept when you deal straight rather than trying to haggle.

    Cheers

    Andrew

  159. Lucas

    The obvious answer is because the t-shirt guy is Indian, too.

  160. People talk. If you get it for $8 then you’ll tell other people. Pretty soon a lot of people will be expecting to pay $8 or even less. Of course, ordering more than one shirt changes things. Maybe he would go for 2 for $16.

  161. Kishan

    He didn’t sell you the shirt because of unconscious biases in the human brain with numbers. The human brain thinks logarithmically, not absolutely. People are naturally wired to think in terms of percentages, not absolute values. The $2 discount is %20 of the full value ($10) which is why he didn’t sell you the shirt (even though it really is only $2 off). Had the shirt been $50 or $100 I’m willing to bet he would have sold it for a $2 discount.

  162. Yoshiki

    The guy selling the $4 T-shirt thought he deserved more money and he’s ‘waiting’ for a person with a bigger wallet without proving that he deserves the money

  163. Deezy

    His price is 10 bucks and thats that. He won’t budge because the market for his shirt has great demand.

  164. Hi Ramit

    What no one has asked yet is “what is the true cost of this t-shirt?” If the guy pays $4 for the t-shirt, what is the human cost of factory workers in India making that t-shirt?

    Terrible and unsafe working conditions (sweat shops), below poverty-line wages, 12-14 hr shifts and underage child workers, exploitation and human trafficking. THAT is the real cost, the social cost, and then you want to devalue the $10 t-shirt to $8. If you consider what little money the seller makes, and the hidden costs (that no one wants to think about here in the US) of cheap clothing, then what would you offer? We are so far removed from the problem that it’s easy to not feel personally responsible when we buy clothing from H&M or Uniqlo or a $10 t-shirt vendor.

    While you have just talked about giving back, how about getting involved in bringing attention to this enormous global human/social rights issue, esp within India? I would urge you to do two things:

    1) watch this Radiohead / MTV EXIT “All I Need” video which is very powerful:

    https://vimeo.com/14819307

    2) go see the new documentary “The True Cost” which was just released last week.

    Thanks,
    Jen

  165. Its because Bargaining is never considered as a pricing factor while he priced the T-shirt. If there are more Indians in his market(Why should he lose their market), Then of-course I am sure, he would have considered the bargaining as a pricing factor itself and Set the initial Mark-Up price so high that even after bargaining he does not lose money/Profit. It simply because bargaining was not never considered as a factor in setting the price.

  166. The one thing that no one here has commented upon is that the seller could have gained something (knowledge, a bit of market research, or potentially reach some additional sales opportunities in return from the $2.00 discount. Like
    “…. Sure I will sell you this shirt for 2.00 dollars less; if you fill out this card here giving me your name and email address, and answering these three simple questions about my t-shirt offerings (insert market research questions here…) AND, if you give me the name and email address of four of your friends with my permission to tell them that you… What is your name? Ramit, Glad to meet you Ramit! (shake hand firmly, look him in the eye-) I’m Bob the amazing bitchin’ t-shirt guy… so, with your permission to tell four of your good friends that You just purchased this shirt from me, and perhaps they would like to have a similar bitchin’ t-shirt of their very own, or at least join my email list? What do you say? 2.00 bucks for four of your good friend’s information – now make sure that these are friends who trust your judgement…”

    Why give $2.00 away for nothing, without at least opening a dialogue with a counter offer, or building possible rapport to ask Ramit “why he feels the need to haggle for a $10.00 shirt, or is it just a habit?” etc…?

  167. stacy

    There could be many possibilities and angles to the why. If he is a savvy and confident business vendor- he knows that confidence and value go hand in hand, thus he was confident in his set price knowing that you may attribute more value to the product and his tshirt store. It could be that he had a set quota for the day. But whatever the reason, I hope its worth the scroll down of endless possibilities to add another comment of possibilities 😉

  168. william

    Just to be honest. selling without selling his soul

  169. Camilo

    1st bet: you just assumed the t-shirt costs $4 to him, when you are actually not sure about this. Maybe it costs more than that and the guy couldn’t afford giving you the discount you wanted.

    2nd bet: The guy was also indian and loved to negotiate just like you :))

  170. Holey moley!

  171. He probably thought you were a tool and wanted to make a point. It’s a business owner’s prerogative.

    If he wanted to be powerless and take crap all day he could go work in a cubicle. We always have a choice.

  172. I think the other guy’s smile was a lot better than yours, when he says “take my money” 😏

  173. Allain

    If I were the seller. I’d think that ‘why should I give him $2 discount if there’s another guy that’s willing to pay $10’. In addition, lowering the price can also lower the implied value of the product that other buyers would think that the materials used are of lower quality.

  174. Dan Daddario

    As a business owner I value my time at $60 per hour. So I figure if I waste a minute I waste a $1. If I decide to take 1/2 a day to golf in a charity outing will I make $240 in sales/contacts to justify the expense. The T-shirt seller must know that negotiating will result in a lower sale price if a sale is made otherwise why negotiate. Therefore if it was negotiated at $2 off and he spent only 4 minutes of his time then he just lost $6 and made no money. If he did 15 consecutive negotiations then after 1 hour he would have “made” $60 but his time is worth $60 so he is break even since he could have spent that time on marketing, selling or other management functions that have a value of $60 per hour. If he was smart and wanted to engage in “negotiative” selling then hire a clerk to do it at $15 per hour and then he’ll have a real profit of $45 and time to manage and grow his business.

  175. Simple. He believed that you were willing to pay $10. Of course, he’d rather have $8 than nothing, but why negotiate just because Ramit wants to?
    I love negotiating at farmers/flea markets. My girlfriend does not. When she wants something, I negotiate for her. But when she says “I really want this!” out loud, it’s game over. No matter how hard I negotiate, the merchant knows I will pay full price! He would only negotiate if he thinks I may walk away, which is why you should always act as if you will.

  176. illyaz

    at $8 you are not his ideal customer. You’ll get his t-shirt at $10.

  177. I design all the products on my site, so for me.. to offer it at a lower price point is me basically not believing in my art work and my vision. I know what my art is worth to me… and so that is the price I set it at. I’d rather sell to someone at the price I set knowing they appreciate all I put into it.. then to someone that got it at a “bargain” price and doesnt appreciate it as much. I value myself and believe in my product — we do not even offer sales but only once a year. And we are constantly asked “when is your sale” or “do you have any specials going on right now”. …. the answer is NOPE!

  178. manoj pradhan

    the farmer need extra money to being his live and for his family he was retailing the t shirts and shirts to keep some profit to live his life…
    thats all
    thank you

  179. Aaron Garn

    I think the guy knew that if he just gave in, he wouldn’t have stood out as an interesting case study to be exampled in a Ramit email … just another run-of-the-mill negotiation conquest. What’s interesting about that?

  180. Michelle

    I’m probably late to the game….. You didn’t say what the shirt had on it. If it had a logo on it or something he printed on it then, he might have had to produce the logo and put it on there himself. So even if he paid $4 for the shirt. He might have spent more on the products for the logo. So therefor was not willing to lower his price. If I paid $4 for a shirt and put a logo on it. In actuality I paid more for that shirt because the printing cost and manual labor for putting the logo on the shirt.