I felt a little ackward about this too at first. But then someone told me that the vendors are a bit offended when you don't participate in deal making, like you pity them so you give them full price.
So this is my approach. I know how much I'm willing to spend for an item. Ask them how much it is, which of course is usually ridculously high (i.e a dress I liked was $80). I put it back, like oh well, and tell them all I have is $X, which I have in my hand. The bidding begins, but I show them the money, I only have $X. Then I start to leave. They usually say 'hold on' and ask 'the boss', while they're talking I hold up the money and ask them if they want it because I have to get going. Trust me, they don't want you to walk out of their store with money in your hand. As I started walking out after offering them 'all the money I had', they were more than willing to sell me their $80 dress for $15.
Remember, US$ is worth a whole lot more in their country. $15US is a good deal of money for them.