We’ve recently been looking at our expenses to see if we can lower any of our bills. So far, the results have been promising. Earlier this year, we cut our car insurance bill in half. We also noticed that our cable and internet bill went up, so we called our provider. After speaking with customer service, they extended our promotional rate for another year. That 5-10 minute phone call saved us around $150.
A big reason that more people don’t do this sort of thing is that they don’t know where to start, or they think it’s too hard to do. Trust me, it’s a lot easier than you might imagine. The web also has tons of resources to help you with your bills, and by using these along with the RECAP method (outlined below), you can lower your household bills painlessly.
The RECAP method
I’m currently reading Nudge, a book about behavioral economics. In it, the authors talk about “RECAP” as a way to assist consumers handle making complex decisions, such as comparing cell phone usage and looking at plans. It involves the following steps: Record, Evaluate, and Compare Alternative Prices.
What follows is a rundown of how you can use this model to systematically negotiate and optimize your household bills.
Record your current bill and usage for each company
Look at your bills carefully and examine your services and all costs. For example, when looking at your cell phone bill, note how many minutes you get and any other benefits that you might have, like rollover minutes. Be informed of every fee that currently exists with your services.
Evaluate whether or not you’ve optimized your service
Sometimes we pay more for something than we actually use. Keeping with the cell phone example, take a loot at the average number of minutes you’ve used in the past 6 months. Are you close to the limit, or could you move down a tier? Sometimes people buy a plan thinking they’d rather be safe than sorry, but they end up wasting a ton of money.
When I looked at our cable and internet bill, I saw that we’re using all of the services, so I knew we wanted to keep them. Thus, when I called the company, I was only interested in negotiating the price.
Compare Alternative Prices
Take a look around, and write down how much each comparable service’s costs, paying attention to any extra hidden fees that switching may include.
Handling the phone conversations
So you’ve done your due diligence and you’re ready to talk to your current provider. How do you handle the phone call?
Here are a few things you need to keep in mind as you speak with the company on lowering your bill:
Take notes during all of your calls. Keep a notebook or spreadsheet of who you talk to, when you called, and what you agreed to. You may have to go back and reference the call if there is an error with your bill, so be thorough. I’ve had this happen once or twice for cable, but as soon as I mentioned the customer service representative’s name and summarized the conversation, it was quickly resolved in my favor.
Be brief when explaining why you want a discount. Customer service representatives are trained to counter your arguments. Be polite, direct, and calm. Getting emotional will not help, and you might even wind up with negative notes added to your account.
Ask them what can they do to help you. I called our cable and internet company and simply said: “I’m calling because we noticed our bill increased. We’re really tight on money right now, so I wanted to see what you could do to help us.” This puts the ball in their court, and makes it awkward for them to say no. The customer service representative placed us on hold or a minute or so and when she came back, she gave us the discount.
Be ready to actually switch companies. If you’re not getting the service and price that you need, you have to be ready to walk away. Most of the time you’ll be transferred to the cancellation department (sometimes referred to as “retentions”) which usually has more authority to help you.
What not to say
In talking about negotiating with banks, Ramit Sethi had some good points on what not to say:
- “Are you sure?” Don’t make it easy for the rep to say no.
- “Is there anything else I can do?” Again, imagine if you were a customer service rep and someone said this. It would make your life easier to just say “no.” As a customer, don’t make it easy for companies to say no.
- “Okay.” Don’t give up here. Despite what you learned in sex ed, “No” does not mean “No” when it comes from a bank.
Avoid questions with one word answers. Instead, ask what else they can do tell help you. Engage them and it will be harder for them to dismiss you.
How much have you saved?
I’ve shared a couple of my personal experiences with lowering our bills. I’m curious to hear your negotiating tips. What does (or doesn’t) work? And how much have you saved by calling companies and negotiating with them?
I am a firm believer in being frugal and I am very well aware that in these current financial times that people need to fight for their money. I am not by any means affiliated with it, but I had browsed through a book called just that, Fight for Your Money, because I wanted to come up with ways to suggest my clients and readers to save money. You put together a great list! Often times I suggest people reach out and basically negotiate. That’s how business was always done in the past. That is how most wealthy people become wealthy, they make it clear that they understand there is more money than needed going towards products and services. Take back your money folks! Listen to these suggestions that Laura makes, as I feel they are right on target. Be frugal, save, and invest, for you! Thank you for the wonderful article Laura!
A very successful tactic I have not heard mentioned is to create & maintain separation between the CSR and the company itself.
Basically you want to create a distinction between the CSR and the company they work for. This allows you to voice your displeasure with the company, while not attributing any of the displeasure to the person you are dealing with on the phone. For example instead of saying, “You are charging me too much for Internet“, say something like…”I am just really unhappy with how much Comcast is charging me for service, especially with all the other options out there.“
The RECAP approach sounds like great advice. Consider combining it with BATNA – the best alternative to a negotiated agreement. To create better outcomes from discussions, focus hard on increasing the value of your alternatives to not reaching an agreement. This approach can be applied to situations ranging from credit card interest rate reduction talks with your lender, to discussions on having the terms of your mortgage contract improved, to business relationships.
Hey I’m impressed with how well you guys are able to cut expenses. Thank you also for sharing your tips. We’re in this together and you better believe I’m trying your suggestions when we shop for a better deal on renter’s insurance.
I’m on my lunch beak, so my apoogies if my comments seem a bit rushed.
@Stacey: That’s a great point about upgrade deals. We had that when we first moved in to our apartments and it saved a lot of money.
@Baker: Never tried that technique with a CSR, so I’ll let you know on Twitter how that goes. 🙂
@OblivousInvestor That’s fantastic! I’m glad you were able to save some money. You’re right; that’s a pretty good hourly rate. 😀
So, I’ve been reading a lot about doing this lately. After reading this article, I actually went ahead and tried it this morning.
Took 48 minutes grand total. (no fun!) But I got our internet bill lowered by $25/month. Wow! That’s not a bad hourly rate for work.
I haven’t used any of these techniques yet, but “REACH” sounds like a good approach, something I’ll have to evaluate. Thanks for the tips!
We have saved a ton using similar techniques.
I did an expense audit when we first started getting serious about paying off debt, and again 3 months later. I’m due for another shortly.
We’re saving $17,000 this year!
One technique I like to use, as well, is to ask the rep what they would do if they were in your shoes.
I’ve gotten amazing responses from this. They seem to someone come up with some creative options. I’ve asked a credit card company before, “I’ve gotten a couple 0% offers in the mail… Honestly, what would you do in my situation?” That’s a tough question for someone to be able to answer!
Great read! I think anyone can benefit from the tips you provide throughout this.
We’ve saved $15 per month on our internet bill. They’re always offering some special for current customers – all I have to do is ask for the special for *new* customers, and they give me the current customers’ special. It’s usually pretty similar.
Don’t be afraid to upgrade if it costs less – we’re paying $15 less for going from G1 to G5 internet speed. At the end of the 12 month special, we’ll call again and see what specials are available. Worst case scenerio, we simply downgrade to our old, less expensive package!
Great post!
If you want to improve the quality of your life . . . Ask. It never hurts to ask for more or better. Fear of rejection is a dream killer and a roadblock for many people. Their lives would improve dramatically if the only asked for something else.