Sep
24
There is a hot topic of discussion going on a local radio show1 regarding why there is a stereotype about Indians being so cheap(in America). As usual this is a mess created by the government, and the belief among people that laws have magical power of doing soemthing.
The reason why Indians are considered cheap in countries like America, because Indians bargain a lot. Even in India you will realize that you have to(I said ‘have to’ becase we know its not a choice) bargain, and if you don’t bargain then you are being ripped off. The reason behind this is simple, the prices in India are marked by a higher offset than they optimally should be at. The price of every commodity anywhere is determined by its supply and demand. But in India the printed price is always a bit higher than the actual price should be.
Why are prices in India printed higher than they could be really sold at?
The culprint is the Indian law about ‘Maximum Retail Price’. In India there is a law which says that every product’s price must be printed on it as a Maximum Retail Price(MRP), which must include all the taxes(local, state or central). The problem is that all taxes are different. Some places taxes are more than other places.
- Central sales tax – by the union government
- State sales tax – by the state.
- Entry tax – by the state.
- Luxury tax – by the state.
No producer really wants to produce a product for only one town or locality, mostly they want to mass produce the products for the whole state or whole country. So what they are forced to do is to take the highest tax rate, and add that price and print it all over the products. Because of this, every product is having a higher price than the acceptable profit.
For example if say the state of UP has a higher state sales tax(7%) and state of Bihar has a lower state sales tax(2%), for a product intended to be sold in both Bihar and UP, and which costs Rs 100/–, the producer is generally forced to print Rs 107/- on it. Although that product has an accurate price in UP, in Bihar, the retailers would make profit for any sale above Rs 102/-. So the retailers in Biahr are able to sell the product for cheaper than the printed price. Therefore generally you have to bargain and heckle to bring the prices down, and they will be brought down if do the right bargaining.
Almost everybody in India(especially people in small town who have lower taxes) grows up to learn to bargain everything because every printed price is wrong. Now the question arises, couldn’t people just finally figure it out that in the town of Nagpur every price is 7% less(which given enough time they will figure it out). The issue here is, that every retailer has a different cost price of bringing the product into his shop. In America(where there are no MRP laws) a packet of Raman noodles could be brought for 69 cents in a campus store, and 35 cents on an off-campus store and for 12 cents from walmart. That simply means that cost to walmart to bring the product to their store is much lower than an in-campus store bringing that product to their shop(generally because in-campus store deals with more middle men than Wal-mart).
The same thing goes with any retailer in India. In a small town a small grocery store owner in the middle of sub-urbs will give less bargaining than wholesale shops on the other end of the city. Since the cost price differs, you will get a different bargain on every shop, therefore you must bargain at each shop to find the correct price of a product.
In America since there is no such(stupid) law, every shop owner puts his own price, therefore the correct price is printed on the product. There is no need to bargain in America. Most Indians don’t understand it, and therefore this stereotype emerges.
In one line, Indians are stereotyped as cheap because they heckle, they heckle because bargaining is the only way by which real prices can be discovered in India. This stupid government law must be scrapped, and people must realize that Bottled Water(like Bislery and Aquafina) costs more to a Railway Station shop(because of higher demand) than to a inner city store.
11 Responses to “Why do Indians bargain so much?”
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asit dhal Says:
September 25th, 2009 at 2:25 amThat’s true. It’s the sick system which has infected the Indian mind.
.-= asit dhal´s last blog ..I am pissed off =-.
pravin Says:
September 25th, 2009 at 10:46 amthats a very weak argument. we bargain MORE with the street vendor or the guy on fashion street selling nike rip offs.there IS no tax on all that since it is the unofficial/black market.
the real reason we bargain is because we have a thriving bazaar culture. we arent dumb like the white world to accept the price printed on the item.have you seen how we dont bargain at a 5 star hotel?. it is because we are embarrassed to show our innate need to look out for a good deal at such places.i say, go ahead and bargain all you can.it is one of the good things indians possess. come on , a free market is a dead market if people dont bargain (or offer discounts -on the other extreme)
also, if you think taxes are what causes indian bargaining,consider holiday shopping in the US where people rush across state borders to take advantage of ax free shopping. long back,i live on the massachusetts -new hampshire border.NH has no sales tax while MA is a tax monster. people travel to NH to shop all the time. i recently heard that govt agents were trying to ‘bust’ this activity by apprehending such ‘smugglers’.come on get a life,tax-eating-govt-vermin.
renegade_division Says:
September 28th, 2009 at 2:21 pm@Pravin Said:
Yeah we bargain MORE because that guy gets bargained a lot. Imagine if there are no street vendors, and only the MRP condition I described exists. The first vendor comes in. He sells merchandise which is not packaged or marked with price. Since he has no complication of an MRP he decides to quote the real price. But since almost everybody who comes to his shop is accustomed to get price lowered from the regular shops and since nobody really understands the reason, they all do their routinely bargaining. After a few sales in losses(because his customers forced him to sell for a 5-7% discount), he is forced to raise his prices.
If nobody is in a habit of bargaining, then people would bargain less from street vendor.
I have little experience buying from American street vendors, nor do I know if Americans bargain more from them or not.
I completely disagree at that ignorant argument. There is absolutely no cost price in your world.
The reason why people in America get pissed at bargainers because most of them are businessmen themselves and the market derives their prices. When a bargainer comes in and tries to push their prices further down its irritating to them to cut through their own profits.
In America if you put a higher cost then people just would ask the price and not buy that product instead of bargaining. That is in no way different than people bargaining from the perspective of a salesman. They both bring your prices down.
Plus I don’t even see MRP being referred in your argument.
Lets take two imaginary markets. They both have same products sold. They both have same prices. There are same number of shoppers in there with same amt of money.
1) In market 1 the people bargain.
In this market, since the people would be bargaining, the seller would either mark the prices up, and get involved in bargaining with the customer, or he would not mark the price up and will not sell a product by cutting his own profit.
2) In market 2 the people don’t bargain. So if any seller marks the price up his product isn’t sold(or sold less) thereby bringing the price down.(Mind you the people here have the same amount of money), therefore given enough rounds, the prices both the groups of people pay will end up being the same.
Both the groups will end up having the same amount of products.
But, in real life, because the people from market 1(like India) are living in Market 2(America) therefore their bargaining gets them more products than the original Market 2 participants.
Similarly, those Market 2 People(Americans) who got to Market 1, because of their lack of bargaining attitude end up paying higher prices.
So the Market 1 salesmen conclude that Market 2 Shoppers are dumb and they can take any prices they are given(like you made that racial statement earlier(we arent dumb like the white world to accept the price printed on the item.).
On the other hand Market 2 salesmen are pissed to be bargained down on real products and they conclude that Market 1 shoppers are cheap.
Pravin Says:
September 29th, 2009 at 7:37 pmok the dumb white comment was unwarranted.but tell me how is the MRP any different from the taxes the US producer has to pay or pass on the the consumer?
the MRP tells us that there is a bargain to be had if we can force the producer to pay the taxes instead of passing it off to the buyer. the buy-sell price is always a tussle between two parties.the govt-dead-weight called sales tax in the US or a bunch of taxes in india -leading upto the MRP, are inherently the same.
i see no reason why the US consumer must not bargain.infact they do bargain -only they do it by going online or shopping at discount malls.everyone loves bargaining.the question is:will you be upfront about it or coy.
renegade_division Says:
September 29th, 2009 at 7:42 pmMRP is the law which forces producers to put the maximum final price on the product(and retailers cannot sell it for higher).
MRP are not taxes, but tax-included selling price. There is no comparison between MRP and taxes US producers pay.
Both US producers and Indian producers pay taxes. There is no argument there(though I Would love to see both taxes go away, but that’s not what we are talking about here). The difference is, in India govt forces producers to put the final price on the product, in America the retailers put their final price on the product(by a small tagging machine).
Looking for a good deal is not the same thing as bargaining.
GP Says:
September 30th, 2009 at 8:34 amThe difference is, in India govt forces producers to put the final price on the product,
in America the retailers put their final price on the product(by a small tagging machine).
====>Are you saying – in US the sellers are quite honest about their profit margin hence, INDIANS should not bargain in US
( i.e. your statement : In America since there is no such(stupid) law, every shop owner puts his own price, therefore the correct price is printed on the product.)
while in INDIA, they( sellers) are not! (As final MRP being calculated as per MRP laws( i.e. considering maximum tax of the state even if they don’t pay it) and hence, bargaining is OK in INDIA?
For me, – People bargain where they feel they can bring down the price. Most probably at street vendors or local stores but it won’t work in big shopping malls
whether its US or INDIA. From customer’s point of view – its NOT cheap to get a better deal through bargaining. And if customer is more concerned about his/her reputation
as a buyer than the price of product then definitely he/she won’t bargain.
I am not against making money/profit. The only thing is – U can’t lebel it “correct” simply bcoz its US. (As there is no way to detect. Even if you find a fault, you will be replied as “This is my profit margin”..be it in US or in INDIA )
So there is nothing wrong if customer think of his/her own interest at the cost of being labelled as “cheap buyer”
jyoti Says:
March 31st, 2010 at 7:04 pmI completely disagree with everyone. I believe not all Indians but in general Indians are very selfish people and only care about how something benefits them. Being a makeup artist and working as a sales person most of my life, I have seen how cheap Indians can get. I still remember working at Nordstrom and if I would see a Indian coming my way, none of the sales people wanted to help them because they take their time deciding and at the end buy the cheapest item. Most of the time come to get a free makeup over and pretend to buy two items and then return it a week later. I still get so many Indian girls bargaining with me for their bridal makeup fees. They don’t respect talent and quality its all about quantity.
White Guy! Says:
September 10th, 2010 at 5:25 pmI have to say Americans of all colors are bewildered by the almost pathological cheapness of many Indian immigrants, my friends and myself (who make up a diverse group of professions) are insulted by the brazen requests for free services by Indians who have zero history contracting with our various businesses but expect to be treated better than old friends. We Americans view this behavior as a lack of respect for our efforts, an impugning of our character (the assumption that we are attempting to defraud our clients buy overcharging), and a form of stealing. I’ve heard more than once people say that felt ashamed that they are developing a bigoted attitude towards Indians because of these behaviors. We shrug it off saying “well they come from a poor country”, but now after reading the “Dumb White People” comment and hearing an Indian fellow (at 7-11 of all places) quietly talk about how “white people are lazy” I wonder if there isn’t widespread and quiet contempt for Americans, and their culture. If that is your attitude ask yourself how this county that so many people desire to move to could be built on a foundation of stupidity and laziness?
The Mexican Says:
October 12th, 2010 at 2:28 pmWell said White Guy! I manage a high end audio retailer and have seen more than my fair share of “bargaining”. To wander into a high end retailer, taking hours of a person’s time who is trying to put food on the table and provide for a family and knowing that what I sell is the best than to haggle, bargain, or at times almost threaten that if the price isn’t dropped they will walk is disrepectful and just straight up rude. And if you somehow get them a discount then they apparently grew nutts in the conversation big enough to ask “what are you gonna give me for free”? And then a week later it’s returned. It never ever fails. My friends who are also Indian hate to sell to Indians because they know that anything they sell will come right back and ultimatly that impacts their paycheck and losses of our store. I have made many Indian friends and enjoy their culture but when it comes to shopping I want to be a mile away. The funny thing is when asked they admit to it and that’s when they are embarrassed. My satisfaction comes when they try to return it after the 30 day return policy. It’s clearly stated on the receipt and at the registers as well. That seems to be the only time that
the renters or borrowers become owners. There is a difference between looking for deals and bargaining. The deals are great when you find them and you enjoy them. If you have to bargain than maybe you should think about whether you should even be buying the product. Apparantly they don’t see the value and will never be happy with the product even if you haggled the price. This is not a stereotype, it is a fact.
chris Says:
September 1st, 2011 at 11:31 pmbeing a psychologist does not make me an expert, but I have experieced this issue many times. As other people have said, a big part of this is cultural. Having said that barganing is cutural in many other cultures. When my parents first came to the US, I took them to a grocery store and they tried to barigain with the guy and the guy started laughing at them. well that was the last time they tried to bargain with anyone. the main issue with the indian culture is that they are not able to adapt themselves to the new culture when they come to the US. I have seen many indians who still do things that same way that they were doing in India. One example is see often are indian man who are beating up their wives and children.We have to report child abuse to the authorities which is one of the example that i trying not see any indian clients any more.
I am not trying to be racist, i am not white myself. but this is the truth. I have many indian clients who tell me the that they have a hard time adjusting to the new culture. I saw one guy at the post office asking the lady at the counter if he can have 20 dollars in quarter. she said no sir, i dont have 20 dollars. then he said can i get 10 dollars in quarters? the lady said this is the post office sir. we dont give people change. so this is basically the way they think. they rarely adjust to the new culture. we have many indians in bay area and they are very good people and highly educated. but as i said they all have this issue and there is not a damn thing that anyone of uS can do about it. Unfortunately people who work in the customer service are the one that have to deal with this issue day in and day out.
we have to let them be what they are and accept them as they are. that is all we can do.
Ram Says:
November 11th, 2011 at 7:52 pmI am a born Indian.
I am ashamed how the Indians bargain even for a dollar at the Farmers Market.
I am ashamed how rampantly they download the pirated movies. Even the so called rental shops give away pirated DVDs for a dollar. They are willing to watch the garbage quality discs just to save 10-20 bucks a month. Indian DVD rental and sales industry is now practically killed.
I am ashamed how our people clip coupons, spend hours and hours shopping for deals, returning and re-buying, forgetting the cost of time they are spending on it just to get the thrill of saving few bucks.
Mind you these are the NOT the people surviving on minimum wages. These are well to do people earning 6 figures, sometimes close to 200k.
Oh BTW, they wouldn’t blink to drop 50k on gold ornaments and sarees(indian traditional dress) that they probably show off couple of times a year in parties. But, they would be hurt if they pay a dollar extra to a farmer or 20 bucks for quality DVDs or 10 bucks more for that jeans.
When will these guys grow up to learn that quality is never cheap ???