Here’s one that’ll get me in trouble!

All you have to do is get together with a few expats and eventually the subject will turn to getting overcharged in the Philippines. People call it the skin tax, the long nose tax, the white tax. It usually involves prices in markets, street vendors, service people, and taxis. The assertion is that we are all “cheated” for simply being a foreigner. And while I would be a fool to say that it has never happened to anyone, my basic perspective is that it is much less frequent than expats scream about. Now there is a “tax” in the Philippines but it isn’t so much the skin tax; it’s the “you’re rich” tax. In my more cynical moments I’d also call it the “idiot tax” lol.

The fact is that until a couple generations ago “negotiating” was dominant in our Western cultures but that art has disappeared. Not only do stores have fixed prices, they have prices based on whatever some faceless/nameless computer says. Most service organisations followed suit. But it wasn’t that way in our parents’ or grandparents’ day; they knew how to negotiate and it was an important skill to master, as most of our grandparents were poor or little better.

The bottom line in the Philippines is that, as all over the world, the seller wants to get the maximum amount for his goods or services and the buyer wants to pay the minimum possible. So how to do that?

I have to mention that I have some experience in this matter. For many years I ran a small service-oriented business. People came to my office, asked for a service, and I quoted a price. Sometimes they got out their checkbook or credit card, and sometimes the games began. As the “seller” my job was difficult; I didn’t want to lose the business but I also wanted to get the maximum amount I could. And since I had to work with the customer afterward it was important to me that both of us went away without resentment. Often that meant I gave the customer a small discount; enough to make them happy, but not enough to piss me off.

The other thing that most people don’t understand about small business or service people is that often the price depends on their personal circumstances at the moment. Many times I was broke and needed to pay the mortgage that week. That meant I needed to get all the business I could and was willing to drop my price a bit more than normal. Sometimes I was in such bad financial shape that I decided the opposite; that I had to remain absolutely firm on the price. If you came to my office that day you weren’t getting shit for a discount.

Don’t think this is true in the Philippines? Don’t think that sometimes the service guy comes to your house and really needs the work that day (and your pesos)? Of course it does. And dependant on his circumstances that might mean you get a better price – or a worse one.

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Also in my business I learned the art of reading people. I understood when an 18 year old came in wearing tattered clothes, I might be giving a discount. When a guy came in wearing a $2000 suit, he wasn’t getting shit lol. This is in fact the reality in the Philippines. Mrs. Rodriquez comes in and the vendor knows her and her family; he probably knows her monthly income. You, the foreigner walk in and the vendor knows you are rich. There’s no sense saying you’re not rich; compared to Mrs. Rodriquez you are. You’re the guy in the $2000 suit and the asking price will be higher and the seller will be less likely to negotiate down too much. This isn’t racism; it’s just business. One of the reasons expats mistake the “you’re rich” tax with a “racist tax” is that most of us have never been viewed as rich before.

So let’s talk some strategies, shall we.

1. Get rid of the notion that you’re going to be cheated. This is a very poor negotiating stance. Even if you get a decent price, you’ll go away sure you’ve been scammed. I’ve heard guys publicly yell at vendors that they were being overcharged because they were a foreigner. Had someone walked into my office and claimed I was overcharging them, they would have been asked to leave – immediately.
2. If you really feel you are being overcharged for whatever reason – leave and find someone else. It ain’t that hard. If you still decide to pay the vendor what you feel is a poor price – that’s on you, not them.
3. Learn to negotiate. I know many expats who let their wives or girlfriends do all negotiating while they stay in the car or at home. While that is certainly your right and might be an easy solution, it guarantees you will never learn to negotiate here. Go in and do it yourself, make some mistakes and do it again. Pretty soon you will learn the ropes.
4. Perhaps most importantly is; know the approximate price of an item or service. If everyone is selling mangoes for 120/kilo and someone asks you for 150, use that information to negotiate. “120’s the standard price now.” If they don’t come down, no need to get mad; just walk to the next vendor. OTOH if they say, “Yes Sir, 120 is standard but these mangoes are of much higher quality.” Then you have a decision to make; but it’s your decision. You’re not being cheated.
5. How important is the savings to you? If it’s 10 pesos in the market I may not want to argue for five minutes over it. OTOH if it’s a service that means thousands of pesos, your negotiations might be pretty important.
6. Most Filipinos want your business and will give you a discount. We are building a house and needed to contract a particular item. I had someone come over and give me a bid of 9500P. Janet yelled (at me) that it was too expensive. I sent a message to the vendor that the price was too much; what was his best price. “6500 is my best price, Sir.” Sold! Now could I have continued to beat him down on the price? Maybe. But I was happy he’d dropped 1/3 off his price.
7. Always assume the first offer is not the best price. Shake your head, roll your eyes, scream at how high that is, and ask for the “best price.” In most cases the price will come down; in some cases significantly. And be prepared to walk; the seller can tell the difference; they’ve done this for years.

There are exceptions to the above rules. Sometimes I am in a rush or in no mood to argue over a few pesos. Once again in such a situation I have decided to pay the asking price; no one’s cheating me.

Janet has an even harder decision. She still uses the same techniques and language she used before we married. The difference is that then she had to get the best price; she didn’t have the pesos. Today she knows that she can afford to pay the asking price. In all likelihood the vendor sizes her up and also knows she can pay the asking price. Then it is more a matter of face for Janet to insist on getting a reasonable discount. Just like me she too may sometimes decide that the argument isn’t worth it. OTOH we have often walked away when she sensed that she wasn’t getting fair treatment. I’m happy to walk away with her.

The bottom line is this: if you get a lousy price – learn to negotiate better. If you choose to pay the lousy price – that’s completely on you.