Good Rip-offs Go Both Ways

As my wife and I sat at Jeff’s empty desk staring out at the sun reflecting off of the hoods of several cars, I held a piece of paper in my hand. It showed a quick hand-written breakdown of what out car payments would be at the current negotiated price. I had told him it wasn’t good enough to make me buy the car that day.

“I feel like we’re ripping him off,” my wife whispered as Jeff talked with his boss in a back office.

“Perfect,” I said.

Jeff was a really nice guy. He didn’t push us too hard, didn’t try to upsell us on stuff we didn’t need. We just wanted a new, reliable car that could fit four or more, but at a price we could handle. Isn’t that what most young couples want? If we felt like we were pulling a fast one on him, it was certainly better than feeling ripped off ourselves.

Jeff came back. “Okay, we can do the 0% financing deal that ended last month because your credit score qualifies you for it,” he said, “but you’ll need to do it in 36 months.”

Quickly calculating the negotiated price divided by 36 gave me a monthly payment of $448, an awful lot for a compact SUV. I asked him to leave us alone for a moment.

“That doesn’t seem like a very good deal,” my wife said, and she was right. It didn’t. But we had already talked him down more than $2,500—about 15% off the total price—and he wasn’t going to go any lower. Paying 0% interest on the car would be the best way to ensure that we actually paid the quoted price, and the 36-month contract would leave Jeff feeling like he’d done a good job of stealing our money.

All good salesmen are aiming to turn a profit. The better the profit, the more the buyer got ripped off. This doesn’t make them bad people; if you’re willing to give up your money that easily, they want to be the ones to take it. After all, if they don’t take it, someone else will. Might as well be them so they can bring home a good commission.

At $448 a month, after talking him down 15%, we’d reached a compromise: We both felt like we were ripping each other off. If Jeff and his boss felt as if we were taking advantage of them, they’d back off. If we felt like we were being taken advantage of, I’d hope to think that we’d back off too.

In the end, we bought a Kia Soul (you know, the hamster car.) In typical early adopter style, the test drive in our car was the first time I’d ever seen one on the street. In fact, following my wife home from the lot was the first time I’d ever even seen one moving from the outside.

 The Soul, in the woods, bike rack in tow.

I’ve always wanted a black car, and every time I go to purchase one, I come so very close and then end up with another color: Tiel, aqua, maroon, silver. Jeff didn’t have a black Soul on the lot, and wouldn’t be getting one anytime soon, but we needed a car. If he didn’t sell us a car within the week, we’d have to take our money somewhere else. Jeff compromised by knocking the price down by two grand and offering us a dark grey one. In the negotiation process, we talked him down another $500 to get the monthly payment into a reasonable range.

My wife felt bad. Each night that we left the lot, dragging out the purchase process by another day, she’d lament about how she felt bad for asking him to drop the price so dramatically. This is one of the reasons that I love her: She wants the best for people unless they prove themselves to be assholes. I had to remind her that the car is horrifically overpriced to begin with. $18,500 for an SUV the length of a Mazda Miata? Trunk space for one suitcase? 1.8 liter engine? There’s no reason it should cost that much. If we paid that, we’d be ripped off outright, and Jeff and his boss wouldn’t think twice. In fact, they’d probably high-five over it.

The last time I bought a car, I went to Carmax. This alone wasn't necessarily a bad idea, but they have a “No Haggle Policy” which the company spins to sound as if “We’re giving you the lowest price we can, so you don’t have to haggle!” If they sold all of their cars at the lowest possible price, they’d go out of business fast. This policy actually equates to a way to get you to pay too much for your car.

Standing in the Kia lot, I knew we were starting at the high price, we’d counter with a low price, and end up meeting somewhere in the middle. That’s how haggling works! No one expects that you’re going to pay the sticker price (except the Toyota salesman up the street who insisted that “You won’t find a better price for this type of car,” which we did, down the street, at the Kia dealership. And guess who didn’t get our money?) Let me rephrase that: A successful salesman doesn’t expect to get the sticker price except from the occasional wealthy purchaser who hates haggling They print high prices because they hope that someone will come by and just pay it.

I used to go to a music store called Galaxy Music where everything was priced at twice the actual asking price. Loyal customers knew that the actual price of an item was 50% of what was listed on the sticker, but Galaxy made insane amounts of money off of naive people walking in, grabbing something, and taking it straight to the register.

So a good salesman lists something too high so that when you reach the actual price they want, you feel like you’re getting a great deal. You’re a hell of a lot more likely to buy if you think you’re getting a good price, even if they feel like they’ve screwed you over.

It sounds counterintuitive, but the best sales are those that end up with both parties feeling like they’ve ripped each other off. Think about that next time a salesman starts giving you the doe-eyed guilt-trip. Follow @torqtorq