"The armbands were, quite simply, works of art. I threw morals to the winds and began to bargain. Most Westerners believe the key to successful bargaining is to get as close as possible to the true market value of the product before closing the deal. Thy're wrong. The real purpose of extended negotiations is to convince each party that they have wrung from their opponent the best deal they can possibly get. This allows them to walk away secure in the knowledge that not only have they not been cheated, but if possible have made a killing into the bargain. Assume, for example, a typical American faced with a magnificent embroidery. She offers the Vietnamese equivalent of ten dollars. The locals respond with a demand for fifteen. The Westerner, foolishly assuming that time is money, immediately offers to split the difference - twelve fifty - and assumes the deal is as good as struck. The locals withdraw suspiciously. If she is so willing to raise her bid, they reason, then their initial asking price is obviously too low. They return with a new price of twenty dollars. She is piqued at their irrational behavior and briefly considers backing down to her original offer of ten dollars. But no, she made the offer in good faith and must stand by her word. They haggle for a while, apparently getting no closer to an agreement. The locals are just coming to the conclusion that she will go no higher than twelve-fifty and that they would do well to accept this price. She is getting bored with the lack of progress - time is money - and makes a suicidal move. They originally wanted fifteen dollars, she recalls. So be it. She will pay that much. But that was then and this is now and clearly they misconstrued her upper limits. The price jumps to twenty-five. The two long hours it took to purchase one grubby armband left me limp and wilted, and ready to go back to town." Excerpt from Hitchhiking Vietnam

Americans rarely bargain. It's frowned upon in good society. Most people see it as vaguely tacky, low-class, guache.

There are a few things that Americans do bargain for, but only when the stakes are high enough to make it worthwhile, like buying a house. Then we call it Making an Offer and do it through intermediaries like lawyers. For people in third world countries, bargaining is always worthwhile, whether for five cents off a bundle of peppers or an extra handful of rice. In part this is because there is so much underemployment that most people have a great deal of time and very little money. In part it is because $300 per year income doesn't get you very far.

Bargaining in third world countries is also a form of social oil, a way to create and sustain relationships. When I lived in a village in the Philippines I always went to the same fish stall, the same tomato seller, the same rice woman. They knew my name, put aside my favorite cuts, and (usually) didn't cheat me. We laughed and joked while I made my purchases. If you watch any transaction in a village marketplace you will probably see two women banteringand exchanging gossip while they examine produce.

Now watch a Westerner prepare to make a purchase. His back is stiff, his jaw is clenched, his face is an angry shade of red before he even makes an offer. He's expecting to get ripped off and By God he's not going to let it happen.

There's obviously a fundamental miscommunication when Westerners and Vietnamese bargain. Take, for example, a cyclo driver negotiating a fare. He knows the price should be fifty cents. He asks for five dollars...

1. the foreigner is clueless and gives the five dollars, then finds out later that he has been cheated and is furious.
2. the foreigner knows the price should be fifty cents. He says so and pays the correct fare, but he still feels like the driver tried to rip him off. Either he gets angry immediately or he sits a while, expecting the cyclo driver to apologize. When this doesn't happen he gets angry.

The Vietnamese cyclo driver is essentially playing a money game. Sure, he'd like the five dollars. So he asks for it. If he gets it, great - it's like winning the lottery. If he doesn't, no problem. He'll do the trip for fifty cents. If you catch him at the game he'll laugh and give in with a joke or a gesture. He certainly won't apologize - in his mind he hasn't really done anything wrong. He is baffled by the Westerner's angry response.

The moral to all of this is that you can only bargain successfully if you do it with grace and humor - if you treat it as a game. Usually the amounts in question are minuscule anyway - why get upset? I've seen budget travelers ruin an entire meal fuming over a ten-cent fare. And for this they paid a thousand dollars to travel half way around the world.... So BE HAPPY while bargaining. Entertain them. Tell them how poor you are. Tell jokes. Compliment their children, their astute business sense in putting their shop on this particular corner, the lovely golden sheen on the bananas they're selling.... And if you don't like to bargain, don't. Pay whatever they ask - your trip will still be cheap by most standards. If other foreigners complain that you are jacking up prices and creating a bad precedent, smile at them and think about how you spent your morning lounging on a beach eating guavas while they spent theirs arguing with the Honda rental shop over the price of a liter of gas.

The Vietnamese have been quick to grasp the value of time as a bargaining tool when dealing with foreigners. They delight in quoting a ridiculously high starting price, then settling back onto their haunches to allow the minutes to wear away their opponent's patience and pry open his wallet. To this end, the vendors have long since perfected the art of dawdling. They pick their teeth with bamboo slivers. They offer their guests endless tea and under important circumstances, home-brewed rice whisky. They maintain an unbroken litany of praise for their wares, their silver tongues gathering crowds of local onlookers. They bemoan their shanty homes and dozen children and longingly finger the unpatched collars of their customer's clothes...

WHEN you bargain:
Almost anytime. You can bargain for rooms, bus fare, cyclo fare, motorcycle rental, anything you buy on the street or in the market, guides and tours... In general you don't bargain in a restaurant if the price is listed on the menu. A lot of tourist shops also have price tags but it is often still acceptable to make an offer. If you don't negotiate a price before the service is rendered (i.e., a meal or a cyclo ride) then you are generally responsible for paying whatever is asked.

WHY you bargain:
You bargain to develop social relationships and to have fun. Saving yourself some money should be a secondary consideration.

HOW you bargain:
Rule #1 SMILE. It's like the monster ride at the amusement park. If you're not having fun, get off.
Rule #2 Don't bargain with the first person who approaches you (i.e., when looking for a taxi at the airport.) In general the further you go from the center of action, the cheaper the price.
Rule #3 Don't be afraid to use walking away as a bargaining tool. You can always come back.
Rule #4 Don't let pride get in the way of coming back (or Rule #3 is useless).
Rule #5 If you really want something and the price isn't coming down, give in gracefully. (It's that pride thing again.)
Rule #6 Don't always assume you're getting ripped off just because you're in a third-world country. Sometimes the price they're asking is the real one.
Rule #7 Bargaining is a time/money tradeoff. If you're in a hurry, be prepared to pay for it.
Rule #8 Ask (Vietnamese) fellow shoppers the price of an item before you begin bargaining.
Rule #9 Always carry small bills. Otherwise all that work is likely to be for nothing.
Rule #10 Always bargain in native currency. Conventional wisdom says anyone who has dollars can afford to spend them.
Rule #11 If possible, keep going back to the same person until you've gotten to know him/her. Most third world countries have a name for this kind of relationship. The deal is that you offer your business on a regular basis and the seller responds by saving you their best tomatoes (fattest chickens, etc.).
Caveat to Rule #11 Trust but verify.
Rule #12 No matter what your parents told you, when you're bargaining it's perfectly okay to lie. They will...