I'm going to IST next month, and read that everything for sale is subject to haggling. Can anybody give tips on negotiating for the best prices without looking like the ugly American (or Canadian or general loathsome foreigner)?

I did a search for this topic using "haggling" and "bargaining" as keywords, but didn't find a thread like this.

Dress like you are poor. Make the seller give the first offer. Halve that. Meet midway.

Don't wear visibly flaming panties in IST, as they will double their first offer.

YMMV.

I could easily come out wearing a schmata (rag), but what kind of seller would believe a tourist is poor? Turkey, as I understand it, has quality cotton goods, including underwear. Holy moley, I need that!

Don't be afraid to leave (or pretend to) if the seller won't compromise enough.

The "walk away" is the best tactic

I read there are favorable exchange rates when changing your money at the Grand Bazaar. Can anybody confirm this? Also, do some sellers take Yankee dollars?

I want to buy a whole bunch-a evil eye thingies to give as souvenirs, and give everybody the evil eye.

Agree. When I lived in Hong Kong, I loved reading tourist guides because they'd note that in the markets, locals (or mainlanders) may be able to haggle down as much as half the original quoted price for something, whereas a westerner could expect to successfully bargain down 20-30%. What a bunch of malarkey! I (both there and anywhere else) always firmly make my first counteroffer half what I'm originally quoted and if they say no, I say that's as high as I'll go, and if they don't agree, I'll say thanks but I just can't do that much and walk away. Probably nine times out of ten, they run after within 30 seconds and agree to my price. Also - I find it's best to have a bit of that type of back and forth for a bit where they start to comedown in price and you politely stay firm, because if you walk away immediately, they may not be invested enough in the deal yet to care.

Another strategy - I'll keep very little local currency in my wallet and keep the rest in a pocket or separately in my bag, so I can actually pull out my wallet in negotiations and say "no, really. I just don't even have more than that with me so I just can't pay more, sorry" and that can help.

Have in mind a price you won't mind pay for an item. Sometimes if you offer a price that is just too low and walk away, the seller might actually not call you back. And when you do go back, you might not get a price anywhere near what the seller mentioned before. So when you walk away, make sure you really are willing to walk away.

Suggest a discounted price if you are buying more than one item.

Don't be afraid to point out flaws (scuffs, unevenness, discoloration), anything that might get the seller to lower the price.

Just some things that have worked for me.

Have proper change

I would not exchange money at Grand Bazaar unless it is a bank. Offering $ is fine, but price wise you will do better with the Turkish lira.
With haggling I start at 30% and go up. The prices there are not the best/lowest, I would go and tour it, an do my shopping elsewhere.
Beware of the fake "branded" products. For non branded and souvenirs it is fine.
Don't forget to buy lokum to bring as a gift. My fave.

Haggling is a fine art and how you go about it should depend on the circumstances surrounding the deal. If I'm in a touristy area I'll start around 30% of their first offer and go up to no more than 50% - and then only if I really, really want that specific item. Typically, you will find the same items being sold by many merchants and even at 50% you're probably overpaying, compared to what a local would be charged.

However, if I'm at a small open market in some place frequented by locals and the first offer is reasonable, then I'll probably be willing to pay much more, maybe 75% or even full price. It is often the case that these merchants are operating on a much slimmer margin and the difference of even a dollar or less makes a huge difference to them.

The art of haggling is to get to a fair price as viewed by both seller and buyer; not to unnecessarily grind someone into the ground. (Not implying you are seeking to do this.)

And, as others have said, be willing to walk away. If you're like me, you probably already have too much crap in your life anyway.

The notion that you should start by offering half is right in some places, but not in others. For starters, most vendors know this so-called rule.

I remember my son asking a vendor in the Silk Market in Beijing what a tie cost -- the vendor turned over the tie and on the name tag it read "US$250."

My kid offered US$1. Settled for US$5 and he still probably didn't come close to the local price.

I've had this epiphany also. I remember one trip years ago haggling with a street vendor to buy a toy for something like the equivalent of a dollar when he wanted two. Afterwards I thought to myself, was that really necessary.

My Turkish friends, even the wealthy ones, will grind to the bitter end, whether that might take hours or even stretch into another day, until they're satisfied that they're at rock bottom.

+1. My little "moment" came on the streets of Bangkok. On certain days, people line some streets near the Palace to sell wares and, in some cases, personal items. Basically they just setup a small table or lay down a blanket on the sidewalk. One girl was selling some family goods including an old cast bronze Buddha, for which she wanted 2,500 Baht (about $50 or $60 at the time); not at all cheap for something being sold on the street. I got that reduced to 2,000, saving myself a whole $10. Absolutely nothing to me but assuredly a lot to her and her family. At the time, I didn't realize how hard it is for a Thai person to sell such a statue so, for me, it was just a good bargain. When I found out the implications - that she and her family were probably very poor and quite desperate - I felt like absolute sh*t (and still do). I guess without regrets we'd never learn.

I know people like that too. Part ego and part insecurity (fear of being taken advantage of), I guess.

If they aren't making money on it, they won't sell it. I don't have regrets about haggling (except I'm never as good as I think I'll be) and never will do. They're in business, not charity.

If you give in too easily, they'll see the next foreigner as an easy mark, and increase the price by 10%. We have a duty to other tourists to haggle to the bitter end. It's not about ego, it's about ensuring our money isn't screwing up the economy as well. I've used the 'I'm not an American' feigned shock line when they tell me the opening offer on several occasions though, fairly successfully