I've been negotiating since the day I was born. During my summers in Korea, I often tagged along with my mom, aunt or grandma (sometimes all three) through open air markets. We perused through multiple stalls of clothing, produce, seafood and spices with no price tags in sight. As soon as we found something of interest, I would watch them dance with the vendors and occasionally interject "좀 더 싸게 해주세요" (Please make it a little cheaper). An agreement will be made. After the deal is done, I noticed a smile of satisfaction and accomplishment, as we collected the goods.
The open-air market is a treasure hunting game where it's up to you to seek out the diamonds in the rough. Bargaining is just part of the experience. To decrease your chances of buyers' remorse, here are some tips to help you haggle your way to victory.
1. Research what "local" prices are beforehand. I often check out cost of living indices on Numbeo, Expatistan, or NomadList. As a foreigner, it's highly unlikely to get "local" prices, but I'll show you how to get closer below.
2. Always let the vendor name their price first. Vendors will sometimes ask what you will offer, but you should turn the question on them.
3. Counter with the lowest price, so your average can be the price you're willing to spend.
4. Repeat steps 2 & 3 until you reach an agreement. This should take no more than 2 rounds. If it takes more than that, walk away and go to next vendor.
How to get "local" price (or very close to it)
1. Take advantage of volume pricing. Always ask whether he or she can give you a better deal if you buy more than one. Usually, you can drop the price even further.
2. Cash is king. Nowadays, a lot more sellers will take credit cards, but there are fees associated with this payment. The average credit card transaction fee is around 3-5% with currency conversion and network. In some emerging markets, this can be as high as 18-20%. If you pay in cash, expect to be able to discount at least another 10%.
3. Smile and be nice. A smile goes a long way when negotiating with a vendor's often broken English or your broken version of the local language. In Siem Reap, I was looking at some silk pants at the night market. I noticed the seller's young daughter playing in the corner, so I asked the vendor about her daughter. When other American tourists came by to ask about price, the vendor quoted them 2x what she initially quoted me. Being nice goes a long way.
4. Walking away is one of my best tactics. You can probably find the same or similar item at the next stall. Vendors rarely want to lose sales, so they will eventually budge.
5. Be aware of seasons. In high tourist season, prices will be inflated due to tourist volume. In low season, you can take advantage of the fact that you would be among the few customers they could have that day.