Stay out of the center. The area surrounding Plaza Mayor and Puerta del Sol are the major points for tourist concentration, which leads local shops and attractions to raise their prices considerably. Just stepping five minutes away in either direction will put you in a better position when it comes to negotiating prices or finding better bargains.
Wait until the weekend to visit museums and official public attractions. Not only are you more likely to obtain free entrance (or at least a large discount), but the vendors offering souvenirs and other items are more likely to be in a bargaining mood, since the competition is larger. The same is true if you’re planning to attend a sports event. Simply head directly to the arena on the day of the event, and buy tickets at the door, which will save you money on ticket fees.
Book as much as you can in advance. Plane tickets are a given, but also make sure you have hotel reservations, train tickets and preferably excursions already reserved. This will prevent opportunists from charging you an added fee, claiming lack of options or trying to convince you they are your only last-minute chance to obtain something.
Use the VirtualTourist.com website to plan your itinerary. Even if you prefer being spontaneous, having a general idea of what you want to do and see once you get to Madrid will help you get better prices on almost anything. Good examples include learning when things go on sale, when public holidays are observed (which may limit public transportation and force you to take taxis) and what overpriced places to avoid.
Barter for things you need. Check Craigslist listings for Madrid to find things and people who may be willing to negotiate an exchange. For example, some people may offer you a place to sleep in exchange for a few English lessons for their children, or you may be able to secure a free tour or meal in exchange for translation services.
