The barrio of San Blas, the streets right around the Plaza de Armas (particularly calles Plateros and Triunfo), and Plaza Regocijo are the best and most convenient haunts for shopping outings. Many merchants sell similar merchandise, so some price comparison is always helpful. If sellers think you’ve just arrived in Peru and don’t know the real value of items, your price is guaranteed to be higher.
Although bargaining is acceptable and almost expected, merchants in the center of Cusco are confident of a steady stream of buyers, and, as a result, they are often less willing to negotiate than their counterparts in markets and more out-of-the-way places in Peru. Most visitors will find prices delightfully affordable, though, and haggling beyond what you know is a fair price, when the disparity of wealth is so great, is generally viewed as bad form.