If you travel through South East Asia, and lots of other places in the world, you’ll quickly discover that the best way of getting around is to use one of the small local taxis or ‘tuk tuks’.
A Tuk Tuk is a small usually motorbike driven carriage that can hold up to 4-5 people in the back section. They’re used a LOT in places like Cambodia, Thailand and Vietnam. They’re almost always cheap, but there are a few things you need to know about using them, and negotiating the price you pay.
Why you should haggle over the price of a tuktuk
There are a few of you thinking ‘why would I want to reduce the price or try and get it cheaper?’, and I do see where you’re coming from. We’re coming to these countries as tourists, usually with more money than the average local, so why would we want to try and haggle over the price of a tuktuk?
Well, it has a lot to do with economics. If everyone paid the price the drivers offered, they’d raise their prices for good. If a tuk tuk driver realises that people (especially tourists) will pay anything from $5-30 for a small drive, they’ll keep doing it and even start to charge more.
And that might not sound too bad, but in the long term it ruins the appeal of a lot of these places. The appeal being that you can go to the countries, and spend small amounts of money to experience incredible things.
If everyone paid high prices, they’d stay that way, and actually rise even more, leading to a shift in the economics of the country. There are two ways of thinking about this, the first is that by pumping more money into the country, it would help the country, ultimately.
The second way of thinking is that right now, the cost of living is LOW for the people working and living in places like Thailand or Cambodia.
If loads of tourists came and started paying HIGH prices for things like tuktuks which are historically and locally, CHEAP, it would be bad for the locals.
Because the cafes, shops, and restaurants would then raise their prices, because they know the tourists would pay it. This would lead to lots of local businesses raising their prices, meaning that the ACTUAL LOCALS, the people who live there, eventually will struggle a lot more with daily life and costs.
So the best thing to do, is to just pay a reasonable amount, based on what the locals pay, and based on the cost of living in that country. And that price is flexible for drivers, as we’re about to discuss.
How to haggle with the price of a tuktuk
So firstly, bear in mind that almost all tuk tuk drivers essentially make up their prices on the spot. There are rarely meters or set rates, and so in many places it’s just what they think they’ll get you to pay.
And in many cases, that gives you a lot of power over the price. You are the customer, and so you can decide whether to get in and pay their price, or walk away and find another driver. Because the market is so full, and there are so many drivers, you can always walk away and find a cheaper driver.
This means that it’s actually pretty easy to negotiate a price. They’ll tell you one price, and you say another, lower price. If they say no, start to smile, say thank you, and walk away. They’ll lower their price, 9 times out of 10.
In fact, according to the locals (and I’ve spoken to many) the drivers expect that you’ll negotiate the price. They often start really high, knowing that you’ll try and reduce it. And it’s a win win in a way because those who actually pay the first price they hear, don’t mind.
Those that are wiser (like you are now) will ask for a lower price and usually, you’ll get it. This means that you’re still paying a reasonable price for the service, but you’re not contributing to what’s known as ‘hyper inflation’.
That’s essentially what I spoke about before where the market just rapidly raises it’s prices, based on what people are willing to pay. The tourism industry can destroy places in that way, and it can be devastating for the locals who actually live there.
When NOT to negotiate
There are certain things however, that shouldn’t really be negotiated. Hotels and most tours and arranged excursions usually have a fixed price. They usually can’t be reduced by just asking, because in most cases, they’re operated by a company with set rates.
But any time you see a small, one man band driver like a tuk tuk driver or something, the price is whatever you’ll agree to pay. And they honestly don’t mind, unless you’re super rude about it, or suggest insulting prices.
How to know what price to ask for
This leads me onto a fairly important part of the tuk tuk negotiation process. You have to have some idea about what a fair price is. Of course, you can’t get a ride for free, so you need to know roughly what a local would pay for a ride.
Usually, you can find this information out by simply asking 5 locals in the street what the average price of a tuk tuk ride for 5 minutes should be, and then working out an average of what they’ve all said.
What you’ll find is that in places like Siem Reap (Cambodia) the price for a 10 minute ride should be about $2-3 or so. The most a ride of that length should cost, is about $5. There are many things you can buy for $1 in Siem Reap, and for most people a 5 minute journey only costs a dollar.
However, I’ve overhead conversations where drivers have quoted $20 for a ten minute journey, and people have agreed to it and got in the carriage! This is bad for everyone long term. In fact the only person that situation is good for, is that specific tuk tuk driver, on that particular day.
Long term, even he will suffer because he’ll have to pay the higher prices that this sort of negotiation results in. It’s hard to imagine that something as trivial as a tuk tuk ride could ruin an economy, and maybe I am hyping it up a bit.
But the point still stands that economy is based on what a market will pay. If a market (you, the tourist) agree to pay high prices for low value services or products, ultimately, the economy fails or suffers.
What about Uber drivers or Grab drivers?
The exception to this is when you’re using ride sharing apps. In some places like Chiang Mai or big cities in Vietnam, they use ride sharing apps. These are apps that connect you to drivers using the app, and you pay an automatically generated price.
That price comes from the app server, and is decided by a computer. This means there’s no room for scamming, raising or lowering prices or anything like that. The price you pay is set. This makes it possible to get super cheap rides in most places, and the drivers don’t mind because the income is reliable. The app sends them customers all hours of day or night in big cities, so they don’t mind driving for a slightly lower average rate.