FAQ #81 – Why Is It BAD TO OVERPAY In Ecuador?

We often talk about getting price gauged or “gringoed” in Ecuador, and the importance of negotiating a fair price rather than just accepting the opening offer. This is more than friendly advice to prevent you from overpaying; it’s actually BAD to overpay for things in Ecuador.

Overpaying Causes Inflation

First, overpaying can cause inflation. Let’s say you go to the mercado to buy a papaya and the going rate is $1, but the vendor sees that you’re a gringo who isn’t fluent in Spanish and quotes you $2.

You happily pay the $2 because that’s still $5 less than you would pay back in the U.S. for a smaller, less juicy papaya that was picked green, coated with chemicals, and has no flavor.

However, now the vendor knows some people will pay $2 for a papaya and starts quoting that to everyone, even locals. Most locals will negotiate the price down, but may not all the way to $1. They might offer $1.50, which means the price of papayas has just gone up by 50%, at least with that particular vendor.

Haircuts may be a more accurate real life example. The going rate for a regular haircut is $5 to $10, depending on the style and cut.

I went to a barber shop back in Denver before I started shaving my head and they charged me $35 to give me a buzz cut! It took 5 minutes! After I left, I went across the street to Walgreens and bought a special head razor for $15 and started shaving my own head!

If you move to Ecuador and think $35 or more is a typical price for a haircut, you may feel like you’re taking advantage of Ecuadorian hair stylists by only paying $5 or $10, but that’s the going rate. If gringos always pay more, the barber might raise their prices for everyone, even locals.

It’s easy to see how overpaying could cause inflation for lots of things, especially services like haircuts, massages, private drivers, landscaping, housekeeping, etc. The more gringos overpay, the more Ecuadorians will start charging EVERYONE, or at least using the higher price as a starting point for negotiations.

As immigrants in a foreign country, our goal should be to blend in and adapt to the local customs and culture; not change them, especially if they might cause financial hardship on the local citizens.

Overpaying Causes Gringo Preference

Let’s say you’re a private driver and you know that gringos always pay more than the going rate for your transportation services, either because they don’t know how to negotiate, they don’t speak Spanish well enough to negotiate, or they think your services are really cheap compared to their home country.

Now let’s say you’re driving down the road and see two different people with their hands up waving for you to stop. The first is an Ecuadorian and the second is a gringo (we’re usually very easy to tell apart from a distance).

Who do you stop to pick up? Do you stop for the local who will pay the going rate? Or do you drive past the local and stop for the gringo who will likely overpay?

As a driver, you would surely appreciate earning more income from the time you spend driving someone from point A to point B, but as a local who got passed up for a gringo, it could cause a lot of resentment. Especially if this happens often.

The last thing we want to do is cause resentment or lower the quality of life for local Ecuadorians.

It’s Not Racist. It’s the Free Market.

People have told us that price gouging is racist because some Ecuadorians overcharge simply because we’re white. This is a gross misrepresentation and misinterpretation of what’s happening.

Like many countries around the world, Ecuador has a culture of negotiation. It’s also a culture of relationships. Most vendors start high and expect to negotiate the price down. They also tend to charge less if they know you, and more if they think you’re wealthy.

As a foreigner, you may not be used to negotiating the price, and the vendors certainly won’t know who you are, at least at first. And as a gringo, they may think you’re wealthy since a lot of gringos overpay and flaunt their wealth (even if they don’t have any).

However, it doesn’t matter whether you’re a gringo or an Ecuadorian. It’s standard operating procedure for vendors to start by quoting a higher price than they’re willing to accept so they leave room for negotiation.

They aren’t being racist when you agree to overpay. The free market sets the price, the vendor sets the starting point, and it’s up to you to negotiate it down, and potentially walk away if you can’t agree.

How To Avoid Overpaying

The key to not overpaying for products or services in Ecuador or any other country that has a culture of negotiation is to negotiate the price BEFORE you take possession.

That means you need to ask how much the papaya costs BEFORE you pick it up and certainly before you say you want to buy it. Say, “Cuanto cuesta?” to get the price and offer less. If you’re getting gringoed, they’ll come down on the price. If it’s the going rate, they won’t negotiate. If you don’t want to pay that much, go to another vendor.

When you need a ride and wave down a taxi, tell them where you’re going and ask how much it will cost BEFORE you get in the car. Most cities/areas in Ecuador have flat rates, while other areas use meters with minimum fares.

In Cuenca, the minimum fare is $2.50, but they use a meter to track the cost by mile + time over that (make sure they turn on the meter when you get in or they’ll charge you $5).

In Manta, most fares are $2 and we rarely see a meter. In Olón, the minimum fare is $1.50 to go local or one town away. The price goes up from there. Ask around when you arrive so you’ll know what the local fares are. Then you’ll know if you need to negotiate.

We went into a neighborhood eye doctor and glass store recently. We knew that the typical rate for an eye exam is $25 so when they quoted $50, I said, “Ese es muy caro” and we walked out.

That was blatant price gouging, but I knew what a fair price was and they lost my business. Maybe next time, they won’t quote twice the going rate for an eye exam.

You may feel uncomfortable at first when you start negotiating prices, but you’ll get used to it quickly. Just accept that it’s a cultural difference, and it’s normal and expected.

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1 reply
  1. JimBooth
    JimBooth says:

    Excellent article for Ugly Americans over tipping and being over generous does exactly what you have states. GI’s have caused price increases for same reason. I saw taxi prices double in Laos Long long time ago $.25 for short ride. Americans would give them $1!! Soon price was $1 for everyone. 🙁

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