For many years I have been the go-to person when it comes to helping friends and family negotiate or make new purchases. Given my background in sourcing and purchasing, I feel that I have had some valuable information that I have shared with each of them.
Over time I have developed a three-part purchasing process that has nearly universal application. Whether you are buying a car, a house, airline tickets, or stocking up on groceries, these principles can apply to your purchase.
Principle one: Know what you want to buy. This may seem like a no-brainer, but people often will overspend if they do not know exactly what they want. We can pay for features or add-ons that we do not want or need if we are not careful. Make a careful list of the things that are ‘necessary’ and the things that are ‘nice to have’ or attributes that you may not want. Ask yourself fundamental questions about the product. Do you need 4WD or heated seats? What grade of diamond are you willing to pay for? Do you want a larger diamond with a lower rating or a higher-quality gem? Ultimately, you needn't be an expert in the category, but you should know what the options are and what you want.
Principle two: Know how much you should be paying. Again, this may seem obvious, but this is key in your process. Armed with a knowledge of the options, now understand the value of what you plan to purchase. You should gather all of the reasonably accessible market information that you can before making a purchase. Also key - just because you are seeing listings for a certain price does not mean that is the price you should pay. Look for what people in the market are actually paying, and never trust an MSRP. Note price trends. If the value of what you are purchasing is dropping, look deeper into the market and understand why. If you are unsure what the value of a certain item is and you have the option, wait until you know more.
Principle Three: When the opportunity is there, don’t wait to buy. Once you are armed with all of the information that you have gathered in principles one and two, you are ready to buy. This can be a test of patience or a test of agility. On occasions, this is as easy as going to a store or dealership armed with your information. It could also mean that you wait a while for your purchase. In some instances, this could mean that you purchase the item immediately. Since you have already decided to make the purchase and you are an informed buyer you can immediately act, where someone else may not be able to.
This process can be laborsome but can bring tremendous value to your purchasing habits. I’ve used this process to purchase vehicles, meat, real estate, market commodities, and services. Once you are armed with data, you can use them to make informed purchasing decisions.
Happy Hunting!