Bargaining is a
process of price determination for a product in which
both buyer and seller have to agree on the price for
the product. Bargaining is referred to by different
names according to the context, for example when the
product in question is a contract for building a mall
or a multiplex then it is referred to as
Negotiations
and when you are buying a cheap electronic toy from
a flea market then it is called
Haggling.
The underlying process typically is that, a seller first
quotes the price he expects and the buyer then tries
to reduce the profit margin of the seller.
A point, which has to be understood is that, a seller
is essentially foregoing his profit margin when he
is bargaining but rarely will he agree to sell at
loss. So the seller will not accept any bid, which
is very less. Exceptions can be there like if there
is a situation when the seller just wants to get rid
of the inventory, then the seller might be willing
to sell the goods at a loss also.
There is a tendency to not bargain when we purchase
branded goods from big retail stores as it is accepted
that they are selling at MRP. But MRP essentially
means "Maximum Retail Price"
that a retailer can charge and a buyer should negotiate
with the seller, as the seller need not sell at the
maximum price always. If there is a sufficiently large
order the retailer will be willing to reduce the price
slightly.
