As part of our Total Money Makeover, this year we’ve focused on cutting expenses, whenever possible, in addition to bringing in extra income. I’m really proud of the changes we have made to accomplish our financial goals this year. Not only have we cut out some expenses entirely – such as our smart phones, but we’ve also been able to negotiate, and cut back, on many other expenses along the way.
Most recently we’ve been researching the cost breakdown of adding a home phone in order to use fewer cell phone minutes. In the midst of our research, we came across a deal for a higher speed internet that we currently have and a basic home phone plan that would cost the same amount we are currently paying for internet. No brain-er, right? Wrong. Although the monthly fee would be a great deal – the initial set up cost for equipment and service was $200. No way can I justify that expense just to save $20 a month on our phone use and the luxury of faster internet. 🙁 So what’s a frugal mamma to do? Negotiate, that’s what. Here’s how:
- Run the Numbers First – Make sure you understand the entire picture of your personal budget and the costs involved before trying to negotiate prices. If this is a new service provider, look at the start up cost as well as the monthly cost. You should also consider whether or not this is a limited time promotional price (more on that later). If this is a current service provider, look at your bill pay history. How long have you been a customer? Is there an early cancellation fee? Have you paid consistently all along?
- Plan Your Negotiation Strategy – You need to decide what you define as a good deal. For our internet and home phone scenario, I wanted the great monthly price without the $200 installation and equipment fee. Is your strategy negotiable? In our case, it wasn’t. I’m not upset with my current internet and phone – I was just trying to save money. I would not be starting this new service unless that fee was 100% waived.
- Create A Time Line – In negotiating you have to expect resistance. Sales people will usually try to offer you different offers to avoid the loss of money – this can be frustrating, but you have to remember that base level sales people are only able to negotiate to a certain point. You must be willing to wait, and sometimes walk away, to receive the deal you want. In our case, I wasn’t in a hurry. Although I’d rather seal the deal sooner than later, but when it comes down to it – saving $200 is worth a wait in my eyes.
- Call To Negotiate – I’ve found that when calling companies to negotiate prices its best to be very polite, use the sales person name while speaking with them, and to be honest from the beginning. When I started the negotiation process for our home phone, I actually started with an online chat representative. From the start of the chat I was honest about my intentions. I told them what plan I was interested in and that I intended to start a relationship with their company, but that I couldn’t afford the $200 installation fee and was contacting them with the intention of requesting that fee to be waived. I usually even mention from the start, that I’d be happy to speak with a supervisor if that is the person who is able to make those decisions. Note: This is NOT said in a rude way. I’m not threatening to speak with a supervisor, I’m just stating that I realize they might not have the authority to make a negotiation decision themselves.
- Expect to Hear No – You’ve said your peace. Now shut up. Let them think and talk. Expect them to say no and offer you something else instead. When it is an appropriate break in the conversation let them know that you appreciate the offer, but unfortunately that won’t work for your budget. Thank them for their time and leave your contact information in case something changes. Do not get upset. Do not get angry. Thank them by name & hang up the phone.
- Wait – If you call back the same day, or even the next day, you look desperate. Phone calls can be tracked by phone number and they can see that you have already called. If you appear desperate (or worse, if you are desperate) they realize you’re not going to stick to your offer. I would wait a minimum of one week before calling back.
- Call Back To Negotiate – Call back. Same rules from step 4 – use your manners, be patient, etc. Let them know that you’ve already called and that the first representative wasn’t able to offer you what you wanted. Also be sure to tell them you would really like to set up a contract today, but you can’t do that unless a deal can be found. In the case of our home phone I just let them know that I could only set up a new contract if the fee was waived.
- When You Hear No The Second Time… – …you need to politely ask if you can speak with a manager or someone else who has the authority to negotiate prices. You’ll get mixed results. Remain calm, you are not asking for a manager to complain about their service. It is NOT their fault that the they don’t have the authority to negotiate. Once you get a manager on the line, stick to your guns. Make the same offer from every other call and maintain your manners. If they say yes, awesome! Set up a contract and enjoy a glass of wine with dinner to celebrate your success. If they say no, repeat step 5 & 6 above. Remain polite and thank them for their time. Have them contact you if something changes and call back in a week.
- Continue steps 4-8 – At this point you’ve heard no twice. This is not unheard of. In the case of setting up our home phone service I heard no twice, but the third time was the charm. You need to decide if you’re being reasonable? If you are, keep at it with steps 4-8 until they comply. Remember you are the customer, you are doing them a favor by paying for their service. You have the power in the negotiation. If you aren’t, change your offer. Perhaps you will settle for a longer contract or a higher monthly fee, that’s up to you and your budget. When you call back, let the representative know that you’ve called before but that today you’re willing to change your offer.
- Special Note: Promotional Pricing – Most major service companies offer awesome monthly prices for the first 6-12 months in order to rope you in. That’s how they gain interest for their company – but if you listen to the fine print you’ll find out this is only for a limited time. For example, our home phone plan is scheduled to jump from $50 to $81 per month after twelve months. Here’s what you need to know before you commit: Does your contract last longer than the promotional pricing? If so, is there a fine for canceling early? If so, you’ll need to calculate the long term cost of the service and decide if its actually worth it. But if you will no longer be under contract when the prices change here’s what you need to do: RENEGOTIATE. Mark your calendar now. Seriously. In January of 2015 I already have a note that I will need to call and renegotiate the cost of our new home phone plan. At that time my offer in a nutshell will be – continue my cheaper price for the next twelve months or I will cancel. Then stick to your guns. Sometimes they won’t extend the price unless you actually start the process of canceling. Remember, you have the power in this negotiation & you have the right to cancel the offer and your contract.
At the end of the negotiation process, we were able to get faster internet & a new home phone plan with free incoming calls for the same price we were already paying for internet alone. The equipment portion of the installation fee was completely waived, making the new cost of installation $100, but I am receiving that in a rebate visa gift card in four weeks. My contract is for twelve months and at that time I will have the opportunity to renegotiate pricing and my length of contract. That’s what I call a win-win! My monthly expenses will decrease AND I get extra services (faster internet & a home phone) that I didn’t have before.
I’d love to hear about your negotiation stories in the comments below! Good luck & happy negotiating! 🙂