When you shop in the Bazaars of Lahore (or any Bazaar in Pakistan for that matter) you will notice that mostly there are no price tags on the items for sale. The reason is, that the price is very "flexible" there.
For Westeners (Goras) and even Pakistanis who live in the West (like myself) the initial prices are usually higher than those for locals. The shopkeepers in the Bazaars just take seconds to find out which "category" you belong to.
And then the funny part starts: Bargaining!
The inital price the shopkeeper will tell you will be much higher than the actual value of the item you are purchasing. That's because they expect you to bargain.
For example, I bought a jacket in a bazaar in Murree once for 800 Pakistani Rupees and I'm sure even that was more than what a local would have paid. However the inital price that the shopkeeper had asked for was 2500 Pak Rupees. The same behaviour can be found in Lahori Bazaars too of course.
Bargaining works everywhere in Pakistan. Except for the government buildings like Museums or sight seeing places whereever u think that the person who is the receiving the money is the owner or sales manager, you should bargain as much as you can. It is the key of saving 50 of your expenditures ! In the picture on your left Chris is paying a 'Rickshaw Driver', we bargained for the price Before taking the Ricshaw !