We’re exploring different ways to get on top of your spending. This week, we invite you to take on the Negotiation Challenge.
The Negotiation Challenge is a really simple one. You simply commit to phoning every supplier you do business with to ask for a better deal. It’s not hard to do, but the challenge is in sticking it out and getting the job done for ever supplier. It’s worth it to save money and build your confidence in the suppliers you’re using.
Before we drill down into the nitty gritty, a few general points that will increase your negotiating power.
- Know your options – who are your suppliers’ competitors?
- Use comparison websites – they make it quick and easy to see what’s on offer
- Speak to the right person – the customer service representative who answers your call may not be the right person to offer you a better deal. Check to make sure.
- Bundle and save – Streamlining your services can help improve your negotiation leverage as your business is worth more overall to the supplier. It makes you an attractive, high-value customer with proven payment history.
- Be prepared to switch – If you simply can’t get your current supplier to reduce their price to your satisfaction, it’s time to go.
This should boost your energy
First up, call your energy providers and asking for a better deal. Australian consumers on average spent more than $2,600 a year on electricity and gas in 2020. And one energy savings service says that it saves consumers over $350 in average first-switch savings.
Start by doing your homework – make sure you know exactly what services you’re currently receiving and how much you are paying. Then compare what’s being offered by other providers.
Electricity retailers have to publish a ‘fact sheet’ for every retail plan they offer – available on energymadeeasy.gov.au. The fact sheet outlines the rates and conditions of each offer and any additional fees that they charge. You could also try a comparison site or a service which helps you find the best deal. A few to try to get the best energy deal are:
Then ask your service provider to match the best deal you’ve discovered. If they won’t, get be prepared to switch. Remember, this is a highly competitive sector – and providers are likely to want to keep you – or attract you – as a customer.
Get the right insurance
Second, shop insurances – car, home and contents, health insurance. These are big expenses, and you could save a lot of money by shopping around. For example, the average cost of car insurance for a driver aged 35 to 54 is about $1,250 a year – you could save 15 per cent, which is $190 in your pocket.
You may also be able to save by purchasing your insurance policy online (usually between 5 and 15 per cent, depending on the insurer).
You could also bundle your car insurance with your home and contents insurance with savings again of up to 15 per cent.
A record of safe driving could also mean big savings.
Finally, some car insurance providers have a “pay as you drive” or “pay-per-km” plan which might suit you if you’re an occasional or weekend driver.
Bank on better rates
Next up in the Negotiation Challenge is banking.
If your bank regularly hits you with account fees, it’s time to look for another bank. There are plenty that offer zero or no bank fees.
To negotiate your mortgage rate, check what rate your bank is giving new customers for the same home loan, then at least ask for the same rate. If you are paying significantly more than a new customer, pick up the phone and ask your bank why.
If you have a good track record of paying down your debt, and the bank thinks you might switch to a more competitive lender, they’re likely to reduce your rate. Get in now before the expected interest rate rises happen and you’ll be ready.
If you have a credit card balance, talk to your issuer about a better interest rate.
Alternatively, transfer your credit card balance to one with a zero interest offer – often available for up to 18 months. Make sure you check the terms and conditions to ensure that the zero interest applies to balance transfers, not just new purchases.
Everything is negotiable
And the final tip in this negotiation challenge is something of a catch-all. And that is a reminder to negotiate every supplier and purchase.
- Mobile phone plan
- Internet supplier
- Credit cards
- Other loans
- Home help like cleaners, gardeners, pool care
- In-store shopping
Every time you buy something, just ask for a discount. You might get a ‘no’ most of the time, but you might be surprised by how often you get a ‘yes’ – and gain savings you didn’t expect.
Some tips for negotiating any price include:
- Do your research – know what things cost elsewhere.
- Have an opening line ready – such as, “is that your best price?” or “do you know if this item will be on sale in future?”
- Be open and polite – this shouldn’t be an awkward or negative experience. Simply ask for your discount and be open to what the seller responds with.
- Mention a competitor’s lower price – talk to the seller about why their competitor’s price is lower and be ready to ask for add-ons if they won’t price match.
- Head elsewhere if you have to – if you’ve found somewhere cheaper to buy, head on over to make your purchase.
Find more money challenges to keep you on track here.