The Delicate Art of Bargaining

One of the areas I think that baffles foreigners most when living in Costa Rica is what things cost. First of all, you have to deal with a new currency, the colon. On top of that, some things are much cheaper here (for example, we just bought a pineapple for less than 50 cents), and other things, much more expensive (imported goods mainly–an apple is about $1.50).

So, getting prices straight can be challenging, especially when you start talking in millions of colones. We just sold a used ATV for 2 million (about 3600 dollars).

We all want to know ahead of time what it will cost to build something, but the price always ends up being more than quoted. I finally figured out that contractors here give a bid for the best case scenario. Basically, if everything goes perfectly, it will be that price. In a country where even plans for meetings are preceded by “Si Dios quiere…” (If God wills), you can guess how often everything goes perfectly. You would think that the estimates would reflect the normal course of events, but it doesn’t work that way. Since everyone bids for the impossible ideal situation, anyone who gives an accurate estimate will not get the job. Cost overruns are therefore the norm, and you are responsible for adding your own buffer instead of the  contractor tacking it on. The odds of you coming out at the original bid and getting to keep that buffer are worse than the lottery, but I guess it’s fun to try. We have seen that if you work the price down to below usual, what you pay in the end will be the same as if you accepted a quote for around the going price, what with one thing and another. It is very possible the lower bid will end up being the most expensive when you redo the rushed job.

Bargaining is practically a national pastime in Costa Rica, if not an art form. Where you live, are you accustomed to hearing an exchange like this in a retail furniture store? “I appeal to your conscience on the price you are asking me to pay.” “My conscience is perfectly clear, thank you, I know our prices are some of the best around.” That last said with a big smile.

It seems everything can be dickered over, and everything is considered for sale. People frequently walk up to our door and ask to buy equipment that we are using in our business.  The above-mentioned ATV was in daily use, but somebody asked if we would part with it. It is always good when you are not the one trying to sell, but the other party is trying to buy.

If you come up to a farmer and say, “I like your farm, how much?” expect to be shocked at the price. The custom is to offer it at 3 times a reasonable amount, which is to say, “I don’t really want to sell, but if you really want it…”  More than a few farmers have been shocked when the crazy foreigner paid what they asked, and more than a few foreigners have been very upset to discover they paid three times market value.

The best way to buy land is to locate yourself in the area for a while and give yourself a few months to learn what a good price is. Then let it be known that you will buy land for that price. Resist the pressure to go look at properties that are more than your asking price per hectare or square meter. Eventually someone will show up with a property in your price range, because that is what the locals are paying.

After seven years of doing business in Costa Rica, I can see us now on our next visit to the United States trying to appeal to the conscience of some baffled clerk in Home Depot.

Posted in bargaining, business in Costa Rica, buying land, campo, construction, culture, finca, investing | No Comments »

Getting Lumber in Costa Rica

One of the many big surprises to me when we moved down to Costa Rica was how primitive the wood business was. Here you have a country with hardware stores, tools, etc. but if you want wood, you go to the sawmill and buy green! There are also depositos de madera, or lumberyards, but they usually sell green wood, too.  Of course, you can’t install it green, so you have to dry it yourself.

Many people who are building their own home in Costa Rica are surprised to find that you can’t just go down to something like Home Depot and buy a 2×4; nope, you have to find it. Then, after you find it, make sure to get more than you need, because some of them are going to warp, especially if you don’t know how to dry it properly.

The Ticos are an interesting mix of planning and not planning. If they are building your home, it is hard to find someone who understands buying supplies ahead. I think I have finally figured out why. Most Ticos accumulate material and build in stages. Unlike we do in the USA, they don’t generally get a loan, but they store up money for labor and materials until they have enough to start. This means the wood they need for beams, etc. has probably been in the barn for a few years.

We, on the other hand, land here and want to build our home now, the sooner the better.  Often the wood is not available except in a tree somewhere, which will require permits that take weeks to get.  The wood will be rough cut, often by a chainsaw, then you  will wait perhaps 3 months or more for it to dry (sort of).  Since most construction people have nothing more than a power hand planer, the cost of planing and sanding can cost as much as the wood itself.

We paid our dues on this for sure. The first house we built was from trees to house using chainsaws with guides and a 15″ planer. It felt like the timeline for the construction was stretching out forever (we know those of you who live here can relate).

As we grew, so did our milling operation, and we got faster and faster — and more predictable. Now if we need a beam, it comes out of the factory dry, at the right dimensions, planed and sanded and ready to install. The cost of planing and sanding isn’t much when you have the equipment. It is a lot less than paying a construction person to do it by hand. In fact, the costs saved in having the wood ready almost pays for the wood itself when you deduct the labor cost of working with rough cut wood. And of course, the quality is better. We use specialty equipment that allows us to work with beautifully grained wood that would otherwise have a lot of tearouts. With our equipment, we are able to make gorgeous teak products that cost about the same as cedar.

Now we are in the process of educating the construction bosses from Guanacaste to the central valley that they can buy wood ready to install, which helps keep their clients happy. We not only sell the dimensional lumber, but also the tongue-end-groove wood for ceilings and walls (called tablilla here) and floors. In fact, just about anything that is wood in a house, from furniture to cabinets, to floors and doors, we make and sell. And that uses a lot of wood, which is good for our tree owners.

Posted in business in Costa Rica, cabinets, campo, construction, cultural adaptation, doors, drying wood, forestry, furniture, kiln, tablilla, teak, trees, wood | 1 Comment »