The next time you need to get your car fixed, be prepared to do some work for the best rate.
Knowing your stuff and having the courage to negotiate can lead to more favorable outcomes in car repair costs, according a new study done by the Kellogg School of Management at Northwestern University. The study also found that being a woman has adverse and positive effects when shopping around. Specifically, women are more likely to be able to negotiate prices down to a more reasonable market rate, but found when sounding uninformed, women were more likely to get overcharged than men.
The study broke participants up into three categories of customers, those who were well-informed, misinformed, or completely uninformed.
Meghan Busse, an associate professor of management at Northwestern, said in a press release: “Our findings suggest that auto shops may assume men know the market price for a given repair, so they automatically grant it. However, they may not expect women to be knowledgeable in this area, so the perception is they can charge them more.”
Another professor on the project, Florian Zettelmeyer, said, “The same kind of cultural expectations that cause repair shops to overcharge women are probably also responsible for showing preference toward women in negotiations.”
Negotiating for lower prices was a sore subject for many autoshops. The study found the majority of shops were unwilling to budge on their prices, though when they did, 35 percent of women succeeded in lowering the rate as opposed to 25 percent of men.
While women did fare worse among the uninformed, shops were equally likely to charge a higher rate for those who called with a mistaken price figure. Both men and women were quoted significantly higher-than-average prices when they said their expected price was $510 compared to those who called knowing the market rate is around $365.
Moreover, knowing the type of car helped consumers sound informed when calling. Participants were asked to enquire about a 2003 Toyota (NYSE:TM) Camry radiator replacement. In the case of women, Busse said: “When you call each additional shop, reveal that you know what you’re talking about — that you know the car, you know the repair, and you know what a sensible price is — right off the bat. And if you get a price that’s above that, ask for a discount.”
The task is not so tall for men, who, for better or for worse, are assumed to have a more functional knowledge of market prices in this arena.
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