Your providers—from your cable company to your trash company—are more than happy to raise your rates and gouge you for money. But unless you get in their face about it, they’ll never lower them. The key to saving a pile of money is strategic negotiation.
There are countless articles on the internet that claim you can save money “just by asking for a lower rate”, but few really get into the nitty-gritty of making that call. We’ve been negotiating our bills for years, and have found quite a few tricks that work wonders—without a ton of effort or negotiating prowess. Here are the tactics that will almost certainly save you money.
When to Negotiate (and When to Hold)
When should you negotiate for better deals? In short, almost always. There are very few times it isn’t worth negotiating for a better rate on things. Whether you’re thinking about negotiating for better rate for internet service, cable TV, or even talking to your alarm monitoring company, the bottom line is that it’s much cheaper for companies to hold on to an old and loyal customer (even with a discount) than it is to go hunt for a new one. Furthermore, most people in the age of auto-pay, just pay their bills and never call and ask for a discount. You want to be one of the few people who does.
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There are, however, times when it’s just not worth negotiating for a better rate. If the service is already inexpensive and has a firmly established rate, there is little chance you’ll be able to negotiate (nor is worth wasting your time negotiating to save a few bucks a year). Netflix is a perfect example of this. The price is already low, they have plenty of customers, and they simply aren’t going to knock a dollar or two off their already low price for you. Even in instances where the rate is firmly established and you don’t have anywhere to turn (like with your electric/gas company), you can still call and ask them for ways to save—many utility companies will outright give you a big box of LED light bulbs, for example, offer rebates, or a big bill credit if you install a smart thermostat.
The other time you’ll want to shy away from negotiating is when you’re grandfathered into a service or plan that you want to keep. For instance, if you are a heavy mobile data user and you’re grandfathered into some of the old unlimited data plans offered by Verizon or AT&T, you may not want to negotiate yourself out of that plan. But if you don’t use that unlimited data that you’re paying a premium for, negotiating for a lower rate can do you a lot of good.
Do Your Homework on the Competition
One of the most important elements of a good negotiation is knowing the value of what you want, what you can get, and the relationship between the two. In that regard, there are several things you want to research while preparing to call and negotiate with a company. If you know what other providers are offering, you have a lot more leverage to get a better deal out of your current provider.
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Take a moment to write down how much you pay, what features you use, how much data you use (in the case of cellular providers and ISPs), and so on. Then, research what the competition offers, and at what price. You might even call them, saying you’re a potential new customer and you want to know the details of their service. Be sure to take into account everything—installation fees, early termination fees, taxes, and so on—not just the monthly rate.
By the end of this step, you should be able to answer the following questions about every service you’re planning to negotiate a better price for:
- How much am I paying?
- How much is the competition charging?
- What features/benefits do I get and do I use them?
Armed with this knowledge, you’re in a much better position to both negotiate (and to know when to skip negotiating because there’s little wiggle room).
Also remember: Sometimes, it’s worth switching instead of negotiating. Let’s say, for example, you have AT&T cellular service. You don’t like the high price and you’re not even sure you come close to using the data you pay for, but you love the coverage and reliability of the AT&T network. While you can call and negotiate with them for a lower rate, you might be better off just flying the coop altogether and switching to something like Cricket Wireless—an MVNO cellular reseller that uses the AT&T network. I switched from AT&T to Cricket, and even with adding an additional line of service, I still pay 50% less than I did with AT&T.
If you like the provider you have but see better deals with other ones, you’re in a good spot—you can probably get your current provider to lower their price.
Be Prepared to Actually Quit
We can’t emphasize this enough. The most successful negotiation to lower your bill for a service hinges on your willingness and ability to walk away from your current provider. Sure, you can negotiate with a company you don’t intend to leave (or perhaps can’t even leave because they have a more-or-less monopoly on the local market), but this’ll likely only net you a small customer loyalty discount. The real negotiating power comes from the ability to keep saying no until they offer you the best possible deal.
Even if you’ve got a bit of doubt that you really want to go through the hassle of switching from one company to another, you have to mentally fortify yourself and be prepared to leave. Just committing, in your mind, to switching from Company A to Company B will change the way you negotiate. This is why the research phase is so important. You need to know how much you’ll save by switching to a competitor and be ready to point this out.
Talk to the Retention Department (and Be Prepared to Take Notes)
Finally, it’s time to actually make the call. In most cases, you’ll just call the normal customer service line. But you won’t necessarily stay with them for long. Many bigger companies have an entire department devoted just to retaining existing customers called, appropriately enough, the “retention department”. If the company has this department, that’s who you want to talk to.
So, if you aren’t transferred there directly through the original phone tree, politely tell the tier 1 customer service representative that you’re looking to cancel your service because it’s too expensive. Chances are, they’ll transfer you to the retention department if it exists—then comes the real negotiating (see the next section). If not, you can politely ask to get transferred so you don’t waste anyone’s time. Simply say something like “Carl, I understand this isn’t something you can help me with but you’ve been otherwise very helpful. Would you please transfer me to your retention department?” If the company doesn’t have retention department, then ask to speak to their supervisor (who will have more power in the price adjustment process).
Whether you end up with an actual retention department or a supervisor, you need to remember our earlier advice: be prepared to quit. If you want AT&T to lower your rate then you need to be clear that you’re prepared to move to Cricket is pursuit of a lower price. Once you’re with the person who’s going to deal with your case, it’s time to start the negotiation.
As you start the process, get ready to take excellent notes about the interaction. Write down when you called, who you talked to, the terms you agreed to, and any other relevant details about the interaction. That way, should you need to call back and discuss the arrangement in the future, you have a detailed record to follow.
The Main Event: Find Common Ground with the Representative
The absolute best thing you can do is to ally yourself with the customer service representative instead of alienating them. This person’s job is to answer the phone all day and deal with people who are often irate, ignorant, malicious, or all three. How the customer service rep relates to you has a big influence on how successful your negotiating will be. Besides simply being polite to them (which frankly should be a bare minimum of interaction for everyone), there are a couple key things you need to do.
First, you need to establish that you are not upset with the company or product (and even like the company). Nobody wants to feel like they work for a crappy company or represent some evil megacorp (even if they do). Second, establish some outside force that you and the customer service rep are against. This outside force could be simple economics “I really love SuperSpeed ISP, but my budget is really strained and I need to make some sacrifices”, which is a situation everyone can relate to. Or it could even be “I love SuperSpeed ISP and the service is fantastic, but my wife/roommate/whoever found out the neighbor only pays $25 a month for Craptastic DSL. I know Craptastic DSL is awful and you know Craptastic DSL is awful, but all my (wife/roommate/whoever) sees is the bottom line. You gotta help me.” (Another situation almost everyone can relate to.)
In both of those simple examples, the setup isn’t you angry at the company or the customer service representative—it’s you allied with the customer service representative in search of a solution to an external problem (e.g. your budget is really tight or your spouse really wants to switch to a cheaper provider). You might scoff at the utility of this trick, but trust us: after getting yelled at all day, most customer service reps will be more than happy to engage in some feel-good problem solving with you.
Have a Number In Mind (and Don’t Say Yes to the First Offer They Give)
In addition to allying yourself with the customer service rep, you need something to aim for. When I, for example, called my ISP to negotiate a lower rate, I absolutely did not expect them to knock the rate down to the local DSL company’s rate (which was significantly lower for way worse speeds). I negotiated as if I wanted that, however, and was happy when they knocked 20% off my bill and kept my better speeds.
Have a number in mind before you start. You may not get them to match their competitor, but you might be able to get them close, and you need to know what number is good enough for you to stay—and what number is still too high compared to the competition. (Remember, you need to be prepared to quit—and if the competition is truly better, then you’ll be better off anyway!)
Their first offer probably won’t match your number. In fact, their first offer will probably be a paltry discount—don’t take it. That first offer is for chumps. Say “Thanks, I appreciate that, but that really isn’t low enough for me to stay over [competitor]”, or “Thanks, but there’s no way my wife will go for that, I think we’ll just have to quit.” Don’t waver! They may put you on hold as if they’re going to start the cancellation process, but they’ll almost always come back with a better deal.
Be sure to ask if they can remove unnecessary features from your account, too—you might be surprised what hidden fees you’re being charged for features you don’t even use. (Don’t give up any features you actually want, though—even if they offer to remove them, say you want to keep them and get a lower price, and they’ll often acquiesce.)
The more willing you are to jump ship, the better deal you’ll probably get. We’ve gotten deals we didn’t even expect existed because we were fully prepared to leave for a competitor—if you stay strong, you may be surprised at how much you can lower your bill.
Never Sign a New Contract
No matter what you do, don’t sign a new contract. Ever. Maybe ten years ago contracts were the cost of doing business if you wanted a good deal on your cable bill or a low rate on your phone bill, but today, contracts are for chumps in almost every case.
If you call your cable company with the intent of lowering your bill $20 a month, don’t fall for some “sign a 2 year contract that bundles phone, internet, and TV service with a DVR for $20 less!” trap. You don’t want that. You just want a lower bill without getting locked into a bunch of junk you don’t need.
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This is especially important if you’re dealing with a situation where no contract offers you incredible flexibility like with smartphones. If you have an unlocked phone, for instance, you can take that unlocked iPhone to any carrier just by signing up and popping in a new SIM card. Don’t sign up for a long contract that locks you out from negotiating a better price.
You want a lower price. You want it now. You won’t sign a contract to get it. End of story.
When The Deal Is Done, Set Reminders to Confirm and Renegotiate
Once you’ve managed to wrangle the price down, you need use a calendar to set up two important reminders. First, you need a short term reminder to check in on the service to ensure that the bill is lower and you’re getting the service you were offered. One of our staff members successfully negotiated a lower internet bill, for example, but somewhere along the line wires got crossed and they ended up with both a lower bill and lower speeds. All it took was a call back to get things squared away. So set a short term reminder to both check in on the service itself (is it operating as it should a few days after your negotiation?) and around the time of the next billing cycle (was the bill lowered an appropriate amount?).
The second reminder is a long term one: a reminder to renegotiate your price in the future. Chances are, your lower rate is not permanent. If you negotiated a lower internet bill on March 1 2017, and the customer service rep said the deal lasts for 6 months, then set a reminder on your calendar to check your bill (and negotiate again if necessary) in mid-August. Call up then, go through this whole process again, and enjoy more time at your lower rate. Rinse and repeat indefinitely.
It takes more work than simply letting your bills creep ever higher, but it’s not nearly as much work as you may think—and once you do it a few times, it’ll become second nature, and the payoff is absolutely worth it. With a little research and a chunk of time on the phone with customer service reps, you can easily lower your bills hundreds of dollars a year.
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