| HN Mirror

I noticed this too about myself when I negotiated with different contractors for work on my new house. At first it bothered me that I spent 5x as much time & effort finding a good cleaning company ($400 budget) than tile installer ($8k budget). Moreover, though I negotiated with everyone, including the electrician and painter, I didn't negotiate as much with the higher cost contractors as with the lower cost. Here's what I've come up with so far:

1. Knowledge: Part of it comes from the bike-shed phenomenon - I know how to clean, I don't know how to apply knock-down texture. So the more I know about something, the less I want to pay for it and consequently, the tougher I bargain. My solution to get a better deal is to simply learn more. I call up contractor A with absolutely no knowledge about how to fix the problem or what costs to expect. I get some idea (and learn industry-wide terminology) and then call contractor B. I use some of my new-found knowledge to show I'm not absolutely clueless. By the time I've called contractor E, I know more about my problem than anyone else, plus I have a good idea of the expected costs.

2. Past relationship: I only go through lots of contractors when I don't already have a good relationship with an existing one. I didn't have to get quotes from five tile installers because I did that three years ago and found a good guy to install tiles at my old house. This time I simply called him up and he gave me a reasonable quote. You could have a past relationship with the fine-suit tailor and don't need to negotiate 50c each time because you know he is already giving you a good deal.

3. Quality: In the end, you pay for quality at a given price point. I don't mind the cleaners missing a spot but I do mind the tile installer messing up a center tile. You don't want to negotiate too hard with the fine-suit tailor because a 1% risk of damaging a $400 suit due to cutting corners is a lot more expensive than 1% risk of damaging a $2 pen for the same reason.

4. Fungibility: All $2 Bic-black pens are same, not all $400 suits are. Same with cleaners vs. tile installers or painters. You do not want to use price as the only negotiation basis when advanced levels of workmanship is involved. Price can be the primary basis when it comes to common objects or services, available in many places.

5. Continued relationship: I don't much care if I buy another $2 pen from the same vendor in the future because there are many good stationery vendors but I'm not going to find another tailor, painter, or tile installer as easily.

6. Negative perception: I don't want higher cost contractors to think I'm a cheapskate who wants a $5 discount on a $8k project because then they will treat me like a cheapskate and will make decisions based primarily on cost-saving instead of the overall value. I don't want the tailor to use cheaper thread or tile-installer to use less thinset just to lower my immediate project cost because we all know this will cost me more in the long run. I don't mind what a stationery vendor does as long as he sells me the cheapest pen in original packaging.

My overall point is that it's not always irrational to find a better deal for cheaper objects than more expensive services.