By David Morrill and Deke Castleman
“Los precios gringos” or gringo pricing, also known as the “gringo gouge” and “gringo tax,” is a hot topic in virtually all Latin American expat communities. Even in the times of the coronavirus, the subject can raise a stir.
The various terms refer to the price you pay over and above what a local pays for the same goods or services, simply because you’re a foreigner. It’s a time-honored tradition, a game, almost a national sport, to pick up a little extra dinero from often-clueless tourists and immigrants in new countries and cultures.
Ecuador is no exception. If you’re an expat, you’ll hear about it and probably experience it (even if you don’t realize it) not long after you arrive.
To be fair, what we refer to as gringo pricing can be applied to almost any naïve shopper or buyer of services anywhere in the world. We use the term only as a convenient “handle” that most expats understand and can relate to.
Some of the most common opportunities for gringo pricing are in small shops and stores where the prices of goods aren’t marked and the proprietor has an opportunity to size up the customer before determining a final price. You won’t find that in the chain supermarkets and departments stores were items are stickered and the prices computerized.
Gringo pricing is also common at the fruit and vegetable mercados. When you shop by yourself, you’ll pay one price. If you shop with an Ecuadorian, you’ll usually pay a lower price. The difference is usually small but not always.
Another manifestation of gringo pricing is the curious way in which prices seem to change almost automatically (always higher) when they’re quoted a second time. For example, Sylvan Hardy was shopping in a reputable computer store for a wireless keyboard and mouse. The owner, who spoke perfect English after living in the States for decades, said the price was $25. From the time it took Sylvan to pick up the box and take it to the counter, the price changed to $35. When Sylvan protested that the price had gone up $10, the owner denied it. (Sylvan lived for a few years in Thailand and says the gringo, or foreigner tax, is much higher there than in Ecuador.)
Sylavan’s friend, recently arrived from Colorado, was looking for office space. The landlord said the rent was $70 a month. When our friend came back to pay, the price had gone up to $80 a month, “for electricity,” although the office had a single bare bulb hanging from the ceiling.
Deke once agreed to a shoe shine outside the Terminal Terrestre (the long-distance bus station) without asking the price. The shoe shiner asked if he wanted wax (cera) and Deke said sure. When it came time to pay, the shoe shiner asked for $3.50! This was a huge gouge. The going rate is 80¢ for Ecuadorians and $1 for foreigners. The shoe shiner told Deke the extra was for the wax.
The most egregious case of gringo pricing we’ve heard about lately occurred at a farmacia. A veterinarian prescribed an anti-fungal medication for an expat’s pet Schnauzer. At the farmacia, she was quoted $292 for 120 tablets. Shocked, she reported the price to the vet, who told her that many pharmacies give non-Ecuadorians the highest-priced medications. The vet accompanied the dog owner to another farmacia, where they bought the 120 pills for $20.
Okay. So it happens. Everyone has stories like the above and, as we say, from everywhere in the world. How should you feel about it? What do you do about it?
Here’s an exercise that might indicate how well you’ll make the transition from home boy or girl to stranger in a strange land. Consider what you’d think if you found out that you’d just been grossly overcharged for something. Be honest with yourself. Would you feel ripped off and pissed off? Would you want revenge? Would you want to warn everyone you meet about the store, salesperson, and incident? If so, let’s see if you feel the same way after the following discussion.
What’s behind gringo pricing?
Sometimes, it can be explained by xenophobia. A local believes (from the inevitable “ugly American” stories he or she hears, especially in a city like Cuenca with an expat population that’s exploded over the past half-decade) that gringos disrespect the local culture, so why not disrespect the gringo in return?
Other times, the answer it is simply part of the economy of opportunity. This is no different anywhere in the world. A seller sees a chance to make a few extra bucks — and takes it. (See Viveza criolla below.)
Parallel to these perceptions are jealousy and envy. Locals see gringos — and even Ecuadorians returning from living overseas — as rich, and themselves as poor, at least by comparison. Suddenly, the Robin Hood complex surfaces. Particularly puzzling to gringos is that locals often try to take advantage of potentially steady or at least repeat customers. The attitude is to make a buck today, even if it means forfeiting hundreds of potential dollars in the future.
This makes more sense when you consider the cultural underpinnings. In fact, the roots of the gringo-tax issue run so deep that you can dig all the way down to the most complex grammatical constructs in the Spanish language itself and find them. Here, we’re referring to the subjunctive mood of verbs, which has to do with the many subtle, understated, and nuanced ways in which the language distinguishes among certainties, probabilities, possibilities, and impossibilities in the future, an extension of the mañana principle. In a nutshell, when you’re doing everything you can do to survive today, you rarely give much thought to tomorrow.
But what about middle-class or wealthy Ecuadorians who aren’t desperate for a sale and still try to tack on the gringo tax anyway? This is often where it simply becomes a sport, or at least a challenge or tradition.
Ultimately, it only hurts individual businesses, but also the local and greater economies, especially in the long run. After all, in Cuenca, as in most places in the world that attract tourists and expats, foreigners are generally a source of fresh, ready, and return cash. Most contribute to, rather than siphon from, the local economy. It’s the rare gringo who commits a crime. And they often create jobs and pay well. But as we say, it’s a situation you’ll encounter everywhere in the world, not just here.
Continuing the above discussion, we embark on a short tangent to provide a little cultural context.
Viveza criolla is a concept that all foreigners living in Latin America should be aware of. Literally, it means “native cunning” or “creole cleverness
A Cuencano friend uses this example to illustrate viveza criolla. A passenger in a taxi finds a wallet on the floor in front of him and, on further investigation, discovers it contains $500. He can either return the wallet with all its contents to the owner, since it contains an ID, or he can take the money and give the wallet to the driver to return. It is viveza criolla if he chooses the second option. But very important, says our friend: “He will tell himself, ‘God is good to me today,’ and mean it sincerely. He will also feel righteous because the wallet, IDs and credit cards will be returned to the owner.”
The other side of the coin
As we suggested above, the same Ecuadorian who takes a shot at a foreigner will also try to suck a little extra money out of other Ecuadorians as well. These cases are, of course, more common than those about gringo pricing.
For another, it’s true that a gringo presents a big, susceptible, stationary target. But this is human nature. Human nature isn’t always fair, just, or even logical, but it is universal. From this perspective, in fact, there’s no such thing as a “gringo price,” since anyone, foreigner or local, who pays more for a product or service than it’s worth in the local economy either doesn’t mind (charity, generosity, karma, or discomfort in bargaining) or simply doesn’t know any better (ignorance).
So rather than feeling ripped off, you can just chalk up your experience of being overcharged to your learning curve. Or, you can simply decide that the little extra you pay is the price of admission to a new culture.
Once you’ve become aware of the proper price, often just knowing how to say, “I always pay such and such” (“Siempre yo pago …”) lowers the price to what it should be.
Also, universal is the temptation to try to overcharge people who can well afford to pay a little more. Many people, no matter what culture they are from, wouldn’t have a problem tacking on a little extra if they were selling a product or service to Bill Gates, or Mark Zuckerberg, or Baron Von Rothschild.
And when you come right down to it, why shouldn’t gringos pay extra?
If you ask ten gringos this question, all ten will probably tell you, “Well, we should be treated just like everyone else.” Okay, but the fact is, we’re not like everyone else. We don’t have the background in the local culture like everyone else.
For example, how’s your Spanish coming along? Everyone who ostensibly gets the local price is fluent, right? Ecuadorians understand one another much better than they do foreigners, and vice versa. For foreigners, locals might simply apply a “pain-in-the-ass factor” and ask for a little more. (We can tell you from personal experience that gringos who speak reasonably good Spanish have less of a problem with the gringo tax.)
And what’s so bad about paying a little higher price anyway? As consumers, we have plenty of choices as to where we spend our money. If the price isn’t fair, we can always try to negotiate a better price or simply say, “No, pero gracias de todos modos” (“Thanks anyway”).
We know an expat who, before Cuenca taxicabs had meters, argued tooth and nail against paying $2 for a $1.50 cab ride. He offered two arguments: First, it was the principle of the thing; and second, maybe the cabbie would be “more fair” with the next gringo passenger if he caused a fuss. Yet, his quest had already turned into a power play over 50 cents that our gringo friend had to win by the Ecuadorian losing. So it might have actually backfired on the next passenger by creating ill will, which succeeded only in perpetuating the vicious cycle.
And one final point. Some expats feel that they’re gringo-taxed by more gringos than Ecuadorians, especially for rentals and meals at the expat-owned eateries.
How do you feel about the gringo tax now?
Are you better prepared to handle it if it happens to you? Will you not make such a big deal out of it and learn from the experience?
Basically, like most issues, it boils down to how you maneuver through your world. Some people are always arguing with and resisting what’s presented to them. Others are cooperative and accepting of what they experience, even if it costs them an extra buck or two.
Other people echo the sentiment. They know they’re uncomfortable with and unskilled in bargaining, have a limited ability to speak Spanish to sellers, and are possibly naïve about how things work in Ecuador, so they simply accept the inevitable and pay higher prices than the native population without much fuss.
Some aren’t uncomfortable or unskilled, but still feel a little guilty negotiating, say, a dozen roses down from $3 to $2.50 (especially considering that they’re so inexpensive to begin with by gringo standards). Even so, it’s the custom and they bargain a little for everything. One such woman that we know is always warm and gracious, praising the product and thanking the seller until she gets a smile. She says, “Warmth and humor will take you a long way. Merchants can read your heart.”
In the end, of course, no one wants to feel like they’re being taken advantage of when they buy something. So here are a few tips on to how to avoid paying the expat tax.
Try to comparison shop before buying. That could put you in a better negotiating position.
Being a regular customer at particular stores or of vendors at the mercados usually works to your advantage. Latin commerce is greatly lubricated by personal relationships. If you establish yourself as a steady customer, you’ll often find yourself getting more and/or better products (for instance, the vendor allows you select your own) for your money. Among other things, you’ll learn the meaning of the indigenous word yapa.
Ask other expats for advice on products and prices and recommendations for service people.
Better yet, enlist trusted locals to help you, either by negotiating for you before the seller knows the buyer’s a gringo (best for big purchases) or accompanying you on a buying trip.
Make sure everything you’ve agreed to buy is accounted for, at the agreed-on price, before handing over the cash.
Never pay for anything in advance. If you have to, try to put down a deposit, but hold money back, giving you some leverage. We’ve heard plenty of stories in which people handed over money without receiving the product or service and never saw the seller or serviceman again. This way, the seller knows he has to make good on his promise to receive the rest of the money. This goes double for labor. Don’t make the final payment for labor until the work is completed and you’re satisfied with it.
For major expenditures, like a home renovation, car repair, or furniture or appliance purchase, try to get a written quote with everything enumerated. Have a translator present if you’re not comfortable with the language.
Perhaps the best advice of all: If you’re a newcomer, delay major purchases if you can until you’ve lived in Cuenca or Ecuador (or any other foreign country, for that matter) for a few months. Only by being here for awhile and keeping your eyes and ears open can you come to your own conclusions about the best way to navigate through the new world.