Negotiating a Deal - an example

Let's examine how I went about negotiating a deal for solar energy products. Their demand is relatively high, and so is the cost.

If you're going to save money and stay within your financial plan for frugal living, you can't be buying everything at retail prices.

Buying used from a private party is sometimes the best approach. It requires patience and good execution of bargaining tactics. If you do it right, you can make a good deal and make a friend too.

One day there appeared an ad in the local trading paper that offered solar panels for $200 a piece. I had always wanted to use solar energy, but the cost of equipment seemed too high.

This looked like my opportunity to get involved and get solar energy equipment at a reasonable price.

I immediately called and made arrangements to look at the panels. The owner was at work, so I was going to have a self-guided tour of the solar panels sitting alongside his house.

When I arrived, there were 20 flat plate hot water panels leaned up against the side of the house near the front yard. I took pictures of the nameplate to identify make, model, capacity and performance data.

This is the certification on the side of each solar panel.

After performing a little research on the Internet, I discovered that these panels were from a good manufacturer and worth about $325 a piece used, so $200 was a reasonable asking price, but I was focused on negotiating a deal for much less.

Now, 20 times $200 was $4,000 and that was a lot of money. I didn’t want to pay $4,000 but I had a use for all 20 panels, so I didn’t want to pass up this great opportunity to get solar panels that would last me a lifetime. I needed more information to plan my approach to negotiating a deal with the fellow.

I sized up the situation as follows:

  • The panels had been stored alongside the house for a while, but were stored well. Mounting hardware was also present.
  • There were too many panels for the average homeowner, so they were likely salvaged. This meant that they were obtained at little or no cost.
  • Someone wanted the panels removed from the yard to make space and eliminate an eyesore – maybe his wife or maybe a neighbor, or possibly both.
  • There was no plan to put the panels to use around the house based on limited space in the yard and no indication of a project in the works. Besides, the orientation of the house and roof were not conducive to a southern exposure necessary for solar panels.

All things considered, it looked like negotiating a deal was possible, but you can never tell until you try.

I made a decision to make an offer on the panels. My sense was that the seller wanted to get rid of all of them, but knew that they were of value. I called that evening to discuss what I hoped would be a good buy on solar panels.

My conversation with the seller confirmed that his wife wanted the panels removed. He also told me that the panels had been salvaged from a laundry a year or more ago.

The seller was a skilled craftsman with a young family. Selling them all would put an appealing piece of change in his pocket and help me save money on my upcoming solar energy adventure. This would be a win-win situation, and that's the best approach to negotiating a deal.

I offered that I could use about 6 of the panels, and at his asking price, that would be $1,200 – a lot of money to spend. I suggested that I probably couldn’t go more than $150 a piece for the 6 items. That would be $900 – still plenty of coin.

Sensing that the seller was listening, and not drawing a line in the sand with respect to price, I continued negotiating a deal by saying that I could think of uses for all 20, but even at $150, that would be $3,000 and that would start looking like “real money” to just about anyone. He agreed that $3,000 was a lot of money.

Then came the moment to make an offer. I said that if I were to buy all 20, then I couldn’t see going more than $100 a piece – that would be $2,000. I remarked that $2,000 was a lot of money and I probably shouldn’t be considering buying all of them in the interest of frugality.

This comment highlighted the possibility that I might not buy all of them. It was made in hopes of convincing the seller that the fish he had on the line was a good way to sell all, even if he had to let them go for less than his asking price.

We left the conversation with him thinking about my offer and it would be up to him to call me back to discuss further. A couple of days went by without hearing from him. I knew that he was waiting for other prospective buyers to call, so every day that went by was to my disadvantage if I was going to be negotiating a deal in my favor.

I wanted to be "the only game in town" so my offer would look more attractive. I didn’t want competitors that might drive up the price or offer to pay his asking price. I wanted inexpensive solar panels.

After the third day I called him back to see if he had done some thinking about my offer to purchase all the panels. He said that my offer was acceptable. He then remarked that no one else was interested since he didn’t get any other calls.

My approach worked – no competitors meant that I was "the only game in town". He wanted to get rid of all the panels and finding a buyer for all of them met one of his main objectives.

I immediately swung by to make a deposit on the panels. I wanted him to have good reason to close down any potential buyers that might call.

As it turned out, he had paid $1,500 for the panels, but hadn’t got around to reselling them. So the bottom line was that he made $500 on the transaction, and I was saving money on the deal – $4,500 to be exact.

At one third their market value, the time I invested in negotiating a deal with the seller was time well spent, and kept me within my frugal living budget for renewable energy technology.

Here is Humper, my Boston Terrier buddy showing off two of the 20 cheap solar panels that I negotiated for.

Humper (a.k.a. Dude), my Boston Terrier buddy doesn't care one way of the other about the cost of the panels, he just wonders what the pack leader is doing up on the roof.

Done with Negotiating a Deal, take me back to Frugal Shopping

There certainly is a broad scope of topics here at Frugal Living Freedom. When you think about it, money permeates so very many activities in our lives, therefore, being frugal encompasses a wide range of interests, from being employed to taking a vacation, and just about everything in between. Enjoy the variety, pick up some new ideas, and start making frugality a part of your signature.

I'm a big proponent of being debt-free, and I mean entirely debt-free - no mortgage payment. It's not essential for financial freedom, but you'll love the feeling once you get there. If you didn't have a rent or mortgage payment, how much more could you do for yourself with your current level of income? I suspect plenty.

If you ever hope to see an abundance of wealth, you need to plug the hole in your boat. The wealthy don't necessarily make lots of money, instead, they know how to hang onto what they make, and make it work for them.