Negotiating cultures: tips on bargaining

It's cultural, in Mexico even locals have to do it with some services or in some markets but when they see a tourist they try to sell everything for more... this because they know tourist have money to spend and they will try to get more money but this only happens with non-established businesses.

This is a huge topic - good negotiation technique is both an art form and the applied science of psychology. I am by no means an expert, but here are some tips that have worked for me:

• Look for the same goods in "official", "no-negotiation" stores (for example, in souvenir shops in expensive hotels or airports, anywhere where the price is clearly posted). These prices will usually be way too high (often several times the real street price) but will help you set the upper bound for the real price.
• Talk to other travelers, friendly locals, hostel/guesthouse personnel, etc. to get an idea of prices
• Try a strategy with several vendors where you name a price X times less than what they name, and walk away if they don't accept it. Observe how eager they are to get you back in the store. After several times of doing this with several stores you will get an idea of the true prices. If the item you want is only available from a few vendors, then of course the price won't be as negotiable, that's just supply and demand.
• If a vendor is very quick to go down in price early in negotiations, chances are there's much more room to go down even more
• The worst thing you can do is show that you really want a particular item, that it's unique to you. Your attitude should be of idle browsing through the store, not of finding a unique treasure. It's hard to do this, you need a good poker face when you find that awesome item you've been looking for all day : )
• If you don't want to use the harsh tactic of "walking away", say that "you'll think about it and come back later". Store owners know that in 99% of cases you'll simply buy from someone else and won't bother returning to the same store, so they will do all they can to make you purchase right away.
• Once you get a rough idea of true prices in a location, always name your price first! Walk into a store, pick out all the items you want, DO NOT wait for the vendor to name their price and DO NOT ask "how much is this". Name a fair price (but on the low end to give you room to negotiate) and ask if the vendor is willing to make a sale. This gives you enormous advantage. I'd say this is my #1 tip.
• Pick all the items you want and negotiate for the whole lot, instead of one item at a time. A large purchase gives you more bargaining power.
• Stay fairly firm in your price, only going up in small increments. Ideally, it should be in the form of "sure, let's add $X more, but can you then throw Y into the deal?"
• Get a realistic picture of the local economy. How much do regular non-luxury items cost where the locals shop, e.g. local supermarkets? What are typical local wages for skilled laborers? How long does it take to make the good or service you're looking for? All this will give you an idea of a fair price. Often the local wages will seem shockingly low, but the time it takes to make fine crafts will be shockingly high. Don't expect to pay next to nothing for a wood carving that takes a month to make, but you shouldn't pay more than a month of local skilled wages either.
• For some things, you just have to accept that you'll never get a local price. This is especially true in places that have been "spoiled" by rich tourists that don't bother negotiating - this is always frustrating to e.g. a backpacker on a tight budget, the difference is often lost on the locals. And for goods/services that mostly tourists buy, there's not really a "true local price" to speak of.
• Keep quality in mind. It's easy to get caught up in negotiating for the best price, and end up with an inferior product that's only superficially similar to the high-quality version.
• The true price is almost always lower than you think : )
• Shop as far away as possible from places with high tourist concentration
• Smiling and good attitude is very important. It should feel like a friendly exchange trying to find a fair price, even joking around with the vendor, definitely showing them respect, and not an adversarial situation. The more you can pull this off, the better your results will be.
• There are definitely cultural differences/specifics when it comes to negotiation style. Learn by doing, but be prepared to re-learn in a different country/region.