I routinely post about how to save money on everyday expenses by either following simple steps or the more challenging methods requiring you to step outside your comfort zone a bit (see how I saved $250/yr for life with Comcast and how I save money routinely in stores by asking for a discount). Now, dealing with contractors can be a bit more touchy. You're not dealing with a commodity, right? You're not dealing with an abundance of inventory that a store's looking to unload. You're dealing with a skilled tradesman that probably isn't used to hearing price haggling attempts and may have an ego to boot. So, even if you win out, was it worth saving a hundred bucks on a job if the contractor's annoyed over your tactics when they do the job?

The Job

We're having a patio done. I've done a fair amount of jobs myself (like saving thousands on a new kitchen install), but I feel like I've gone to the well on favors from friends and family for helping with big jobs and I'm short on time, so I decided to outsource this one. In order to save on materials, I already moved a fair amount of blue stone/flagstone (whatever it is) from a family member's yard that didn't need it. The patio's a sizable job, at over 600 square feet, plus a wall on the side; not to mention, busting out an existing cement outcropping from a sliding door.

Dealing with the Contractor(s)

We got a few quotes ranging from the low $3000's up to $10,000. Of course, I realized we're not dealing with apples to apples. Each contractor was going to employ a different approach. One guy was laying like 5 different layers of stuff down. Another guy was bringing in heavy equipment; third guy was essentially a kid working by himself who was going to do everything manually, etc. After a few recommendations and some previous work done here, I already knew I wanted Contractor X. He had a crew here earlier in the year to do some landscaping work (I've saved thousands over the years by mowing my own lawn, but this was weeding/mulching job for an incredible price, so the ROI was well worth it to me). Anyway, his price was at the low end of the range, he had a portfolio of completed patios and references to share, I already knew his work and trusted his ethics/business dealings, so at this point, I figured I should just try and get his price a bit lower so I felt I did my job as a price-conscious consumer.

Am I Cheap?

I don't think so. Any entrepreneurial business man is going to quote out his job for the highest possible price he thinks a consumer will pay without walking away. Likewise, a prudent homeowner should have the onus get the lowest price paid while still ensuring the job gets done by the desired contractor in a quality manner. Of course, in this case, the two ranges intersected.

I could tell from his reaction that he didn't usually get counteroffers and that customers usually just went with his quoted amount, but I framed my offer in a respectful, fact-based manner that both allowed him to drop his price a bit, while also allowing him to save face in lowering his price (i.e. one might think that if he were able to lower his price by a single dollar, then he over-quoted me and was taking advantage of me. I don't see it that way, but a contractor is usually reluctant to lower a price once quoted so they can show that they're giving you their best price and not making a lot of money on you, etc.).

The Counteroffer

He mailed me a written quote. In it, he broke out the patio separately from the wall, since I initially wasn't sure I was going to do both. Upon further consideration, I had determined that I wanted to do both, but I withheld that for the negotiation. Now, probably 95% of homeowners either accept the offer as is or don't go with that contractor, so there's rarely a negotiation involved in this type of job. What I did was relay the following information to him:

• He did not offer the most competitive bid (this is PC for you weren't the cheapest, and I used this in my last job with multimillion dollar deals - seems to work), but I was familiar with his work and wanted to see if we could work together anyway...provisionally.
• I wasn't sure if I wanted to do the wall as well, but if we could get the price down a bit, I could probably do both.
• I also offered to pay a higher down payment up front, thinking that perhaps the additional cash flow would be helpful, especially given the current credit crunch. I already had the cash sitting around for the job, so it was no difference to me.

As it turned out, he didn't actually care about the cash piece and said don't worry about it (he's actually doing it this weekend and never asked for the quoted down payment). I had sold the "bundled deal" as a way for him to see if he could find some efficiencies and drop his price a bit. I also stroked his ego in communicating that I was still going with him even though he wasn't the cheapest - but in return, I needed him to drop the price a bit to show that he was meeting me half way.

The Result

In the end, he ended up dropping his price $160. It's not a ton of money, and I didn't pursue a multi-round negotiation since this wasn't a "competitive negotiation", but rather a "win-win" negotiation (if you view your opposing negotiating party as an adversary that you don't intend on doing business with in the future, like say, a new car negotiation, you go for every dime; in this case, we're going to work together again in the future, plus he still has to do the job and I'd like for him to be in a good mood when he does it). To me though, the $160 for what amounted to a single 5 minute phone call, was more than worth it. That's $160 into the kids' college fund or it pays for our first barbecue on the new patio!

Do you have similar contractor/other negotiations stories where you had to step outside your comfort zone a bit to generate some savings?

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