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How to Strong Arm Your Way to a Better Deal
Posted By Jim On 02/11/2009 @ 7:34 am In Personal Finance | 18 Comments
The economic malaise has probably had an effect on your life, I know it has had one on mine. However, as bad as you think your personal prospects are, it’s worse for companies that have to make payroll, rent, and debt obligations. At the end of the day, you have to take care of you and your own, which is why I recommend that you periodically shop around and use that information to strong arm your way to a better deal on the services you already buy.
Don’t feel badly about using your most powerful a weapon, the power of choice, to negotiate a better deal. When you pay $60 or $80 or $100 a month for cable television, you’re not getting $60 or $80 or $100 worth of service. You’re getting something the company is selling to someone else for $30 a month. They will charge whatever the market will bear and it’s up to you, the consumer, to push back and tell them that their price is too high. At the end of the day, they would rather you spend $5 a month than quit and spend $0.
My friends and I go through this ritual every single year with cable television. The best Comcast deals  usually only last 6-12 months before the promotional period expires. Every year, we would call Comcast, pull out a flier from DirecTV or Verizon, and try to argue a better rate. My friends in Baltimore City had a little more trouble than me in the suburbs because Comcast has a virtual stranglehold on cable television. Comcast’s only competitors for cable television were satellite providers like DirecTV. Fortunately, the best DirecTV deals  are very competitive with Comcast’s offers so they were still able to strong arm a better deal.
You can do this with cell phone service, internet service, almost anything where there are good substitutes and a low marginal cost. Marginal cost refers to how much it costs to actually offer you service. With cell phones, the marginal cost is very small because the cell phone towers are already constructed and in use. It’s simply a matter of giving you a handset and the right to add traffic to the line. With cable television, it’s even lower because the infrastructure is in place – you simply have to plug into it. Home security systems like ADT? Same thing, adding another customer might add some load to the system but they certainly make way more money on the subscriber fees.
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