Haggling (bargaining) is common in some countries, such as China, Turkey and Egypt. If you don't haggle, it is highly likely that you will get ripped off, because vendors expect a bit of haggling and state their prices higher than what they expect to receive. Some points to keep in mind:
Many guides and articles suggest offering a fixed percentage (a half, a third, a quarter...) of shopkeeper's first price. Alas, this doesn't work: many shopkeepers are perfectly aware of this tactic and will thus first offer an absolutely ridiculous price that can be tens or hundreds of times more than the real value, which they will then be more than willing to negotiate down to "half".
Instead, try to have a rough understanding of the item's value before you start haggling. For example, government-run craft shops and hotel gift shops generally have (high) fixed prices that will at least give you an upper boundary.
If the vendor's initial offer is too high by far, then feel free to laugh or show astonishment in some way. This is usually expected and will quickly indicate to the vendor that you are aware of the item's real value- even if you are not.
Just as vendors often start with absurdly high prices, you can do an equivalent trick by stating a price that is much lower than what you expect to pay in the end. This gives you some negotiating room. Don't go overboard though: if you offer a dollar for a carpet, the vendor will assume you have no idea of the item's true worth.
For prospective buyers, a common move is to bid the vendor farewell and start walking off. You will most certainly get at least two offers, each lower than the previous. Alternatively, the vendor may ask "How much do you want this?" (or words to that effect), which acknowledges the fact that they realise a potential sale is walking out of the door.
If there are two or more of you, you can wax theatrical. He wants the item, but she holds the purse strings and won't pay the price, or whatever.
Be strong. Don't let them get to you, no matter how hard they push.
Be courteous and friendly (but firm) in your negotiations. If the vendor takes a personal liking to you, you will almost always get a better deal.
You might be offered tea, coffee, snacks, etc. You can accept it and it does not mean you have to buy anything. Although you may be 'guilt-tripped' later. Be strong-willed.
Do not let unknown locals help you bargain or find what you need. You will end up paying an extra commission.
If bargaining for something unique, don't show too much interest in the item you are actually interested in, or the vendor will know that they're your only choice and price accordingly.
The key to making a good deal is knowing the right price. If you know the right price you can just state you price, start leaving the store and your offer will be accepted. To learn the right price, ask other people what they paid for similar goods and try to make a better deal. If you buy several similar items, try to make a better deal each time.
If you are in a country that does not use Western numerals, then learn the local numbers. It will save you a lot of time and money when you are bargaining about a hotel room and there is a price list right in front of you. You should still bargain, but it gives you a starting point.
Find two sellers with the same products and play one off against the other.
Learning to count in local language can win you some respect and therefore a better price. If you can, stick to the local language even if the seller uses English or your own language.
But when bargaining, do so responsibly.
Be honest. If you make a counteroffer, you're now committed to that price. Don't waste your time or the seller's time bargaining if you have no intention of buying.
Choose your battles. By all means bargain when buying a carpet from a posh bazaar shop. But if a bottle of water is too expensive, buy it somewhere else.
Even in cultures where haggling is the norm, many items do have fixed prices. For example, groceries and alcohol usually have fixed prices. If you are asked to pay €5 for a bottle of water, do not start haggling, go somewhere else. Do not haggle when buying e.g. bus tickets; check for a price list in the bus terminal or ask the other passengers in the line or look over the shoulder of the one in front of you to see what the locals pay.
Do not let the other person "lose face". Often it is said that "everything is negotiable" - but it isn't. Loss of face is never negotiable. Be aware that the person with whom you are dealing has a family and responsibilities. You are trying to find an agreed position.
Remember that vendors are generally not evil swindlers attempting to trick people out of their hard-earned money; they are often businessmen working to support their families. When haggling, your goal is not to eliminate their profit, but to find a mutually satisfactory price.
Don't take it too seriously. Have a sense of humor and know when to accept an offer. Remember that usually the amounts you are arguing over are actually a pittance to a traveler from the West, but might mean far more to the vendor.
Some advice on bargaining in a Chinese tourist town is in Yangshuo#Buy; some of it would apply elsewhere.
And finally a trick that has been tested in Egypt and it has proven to work well: usually their first offer for the price is at least five times, but it can be ten or even a hundred times bigger than a reasonable price. First decide what you are actually willing to pay. Let us say that in this example it is 20LE. If you ask for the price, you may get a reply "120LE". Now you offer 22LE. You may then be offered something like 110LE. Then instead of going up, you start going down with the price, your new offer will be only 20LE (your predefined price limit). If the bargaining continues you continue dropping your offer. Pretty soon he will understand where the bargaining is going and you get a comfortable price or - at least - you get rid of the vendor.