What is the Last Price?
Alternatively: Wetin be de las price? [Skip to the next paragraph if this statement brings market memories]. This is a common phrase used in Nigerian market (the physical markets). It is an invitation to bargain. Every product has at least two “prices” in the market: its Price and its Last Price (others have Last Last Price and Final Last Price). Just some technical terms for experts in the art of market bargain. Other technical terms include Customer which is used to refer to the seller (to whom one displays loyalty) instead of the buyer, as in the conventional sense. For clarity, let the jargons be put aside and let us use the terms Buyer and Seller. The buyer asks the seller how much a thing costs, the seller mentions a “price”, then the buyer asks what is the Last Price, then the seller estimates and reduces from the Price. Now the tedious bargaining begins.
Me, I am quite thrift in my spending. I know that because it is not common around my acquaintances. Thrift should not be confused with miserliness or bargaining prowess; thrift is more about being un-wasteful. I used to confuse thrift with bargaining prowess, thinking along the lines of: if I save money by not spending as much as I would have, then I must be reducing waste. According to that logic, it is waste if someone (the seller) gets my money! There goes a hint of the underlying problem with my logic; I will come back to that.
I used to be somewhat skillful in my bargaining ability. I recall this was pointed out to me by my mum (perhaps to encourage this discovered virtue) when I was (less than) 10 years old; after bargaining my way and purchasing a football officially priced at N250 for N150. Since then I wore the crown of bargaining, proudly. Eventually I started to become frustrated with the bargaining process, perhaps because of the mental gymnastics involved which usually leaves me frustrated even after getting a good price. If you get a really good price, the sellers leave you feeling that you have cheated them. I wasn’t comfortable with that, even in a game of wits, in which they are simply delivering their final blow by planting in me the seed of guilt. I would sometimes wonder if I had indeed cheated them.
The mental gymnastics involved in this activity is that you must change/adjust your world view in order to go through this unscathed. Your world view must believe/assume that all sellers are trying to cheat you; hence at the end of every transaction one party must be left feeling cheated (or pretending to feel cheated). More importantly, this leaves you frustrated upstairs, unless you have no better ideals than the priestly quoted, ludicrous and expediently accepted truth that: All humans are intrinsically selfish! Yuk! I am not claiming that people don’t ACT that way, because they do ACT that way, after all we act according to our beliefs. How did this skewed view of the world come to gain so much acceptance?
Well philosophers from ancient times have expressed ideas of the selfish individual. Adam smith (dubbed father of modern capitalism) created an elaborate theory based on that assumption; although experts on Adam Smith point that his theory provided for a correcting mechanism. Adam Smith’s popular Invisible Hand relies on such assumptions. However, I think the rendition of this world view that has affected us the most is that which was forged in the volcanic mountains of the WW2 (World War Two)! It was in this dark times that this world view was packaged so nicely with antique binding that it began to resemble the Qur’an and the Bible. This is Game Theory.
The idea at the heart of Game Theory has been around for millennia, its evolution to its present state has been so for centuries. What is typically referred to as Game Theory can be traced to the genius John von Neumann. Before the second world war, Neumann had set the theoretical (mathematical) basis of Game Theory. He was one of the think tanks involved in the war, on the side of USA; this was a time of high mistrust and suspicion in international affairs including economics. During the war, he adapted his theory to be used in social sciences as models representing the real world: economics, politics, and even bargaining! At the heart of Game Theory is that agents (e.g. buyer & seller, voters & politicians) are constantly in a state of competition with each other trying to maximize their individual advantages; hence the common phrases “Politicians just have selfish interest”, “Sellers will always try to cheat you”. Game theory is the science that give these popular beliefs the credentials of “Truths”. Long story short (This post is getting long) an eloquent mathematical model of agents found its way into social sciences (Economics, Philosophy etc) which deals with humans. The human being presented by Game Theory is the competitive human who only cooperates as a compromise. What started as “assumptions” in a model has since left the confines of academia and taken the guise of “fact” in the real world. The more people believe it, the more they act it, and the more it appears true.
This state of the world did not settle well in my head, not because I had a better argument but it left bitter taste in my mind’s tongue. I realized people are on auto pilot, like bargain-seeking zombies, on their quest to get the best bargains that they do absurd things like: they would bargain for anything from sweets to houses if they could; they would spend hours bargaining when their time could be better spent; they would swear by their gods to convince their opponent; they would argue about prices not because they know the cost but because they assume whatever price they are told is extortion… I felt this was all psychotic. Seriously, I think it is psychosis!
Slowly coming out of my frustration with the nightmare that is bargaining, I had an idea: I would only bargain if something is “worth” bargaining for. At the same time I was going through another transformation: I disliked the idea of needing (or depending on) anything/anyone, except God that is. With the two ideas I deduced my own philosophy/attitude with regards to commercial bargaining. The philosophy addresses my concern for this pervasive psychosis that destabilizes spirit, and my appeal to lack of dependence. However I exist within a certain economic context and I am no way omnipotent. The premises to my philosophy follow.
First, I don’t need anything that is not necessary for my survival, which is most things. Second, even among the things I need, I could survive on the most basic of them. Thirdly, if one is to bargain, they should have a good idea of the cost, else don’t bargain. Fourthly, a seller is entitled to making reasonable profit, else what’s the point of serving you? Based on the third point, my attitude to bargaining depends on whether I know about the cost or not. Adam Smith (given his assumptions) argues that the price of stuff is determined by the Invisible Hand (one might think he is talking about God, he is not). I am more inclined to set my own price; I call it my Decisive Hand! With all this, my philosophy can summarized in two sentences:
If I know the price of a thing that is not crucial to my survival, and I would like to acquire it, I state a price I think is fair and purchase or walk away. Secondly, if I don’t know the price, my Decisive Hand decides on a price I am willing to pay, then ask for the price, if the price is lower than my own I pay, if not I mention my own, then purchase or walk away.
Each time I walk away, I remain conscious that it could be mistaken with a bluff, which is a common “tactic” in this war of bargain and profit. I make a point of clarifying to the sellers that this is neither a bluff nor done out of spite, it is just an a plan that didn’t work, an equation that was not solved, a relationship that did not work out (“it is not you, it is me”). I don’t expect them to understand it, and I am just articulating it for the first time perhaps on this blog, so I wouldn’t have given them the link to this blog. But I leave there feeling better about myself for having tried to explain it to them, even if they don’t get it.
I leave not victorious or cheated, but always with my spirit un-conflicted and no less a survivor. This is my Last Price.