How often do you come across a potential client who just won’t share their project budget?
“It’s like shooting in the dark!” exclaimed my client, a website developer. “I have no idea how much they’re willing to spend. And I am wasting hours and hours making proposals that are ultimately rejected.”
Many small, service-based business owners admit to encountering clients who just don’t share how much they’re willing to spend on a project. On one hand, you don’t want to price too high and lose the business. But on the other hand, you don’t want to price too low and leave money on the table. So what do you do?
After advising dozens of clients on this issue, I’ll share some pointers on navigating budget ambiguity and, ultimately, locking down a dollar figure before you start the work.
We Admit, Talking About Money is Uncomfortable, but it’s Necessary
One way to make a room feel awkward is to talk about money. For some reason, we’re not comfortable discussing it. So project budget conversations can be stressful for both you and your client. The good news is it definitely gets easier over time.
When taking on new projects or clients, it’s critical to talk about budget upfront. If you neglect to, you’ll waste a lot of time with off-the-mark proposals and miss on opportunities to land projects bigger than you expected.
Our Tip: Just Ask
Just because the client doesn’t volunteer their budget doesn’t mean they’re not willing to talk about it. Since you ultimately own the project, it’s on you to bring it up. An architect told me recently that she was often surprised by her prospects’ willingness to discuss budget, once the topic was initiated.
Many Reasons Clients Don’t Give You a Dollar Figure
When clients say “I don’t know” or “I don’t want to say,” there are a number of reasons behind that.
The first possibility is that actually do know but don’t feel comfortable telling you. In many cases, this is because they’re just not educated enough in your industry to propose a cost for your service. They may have a dollar figure in mind (or maybe they don’t), but fear that sharing it may scare you away. At this point in the conversation, you need to educate your client, then probe for a ballpark figure.
I was caught in this situation recently when I hired a DJ for my wedding. Does a DJ cost $500 or $2,000? I never had to hire one before, so I was genuinely clueless.
One other reason a client won’t share their project budget is because they simply don’t have the generous budget to spend, but are interested in the services you offer them. These prospects, while often well intentioned, can quickly become a time sink. Identify them and move on—or you may quickly become their “free consultant.”
Before You Make the Call, Ask for a Ballpark Budget
Now, let’s make sure you and your client are on the same playing field. Even clients who genuinely have no idea what their budget is will still know if you’re talking closer to $500 or $5,000.
Your follow-up to “I don’t know” is to offer some well-backed up figures. For example, “I understand you don’t know your budget yet. Do you think we’re talking more like $3,000, $5,000 or $7,000?”
Pick these numbers carefully. The smallest number should be the smallest project you can imagine them wanting, but never lower than the minimum project you’d accept. The biggest number should be a few steps bigger than what you can imagine they’d want. Aim high; you will find some pleasant surprises! If you’re not at least a bit embarrassed to say the number, go higher. You will not scare off the prospect, since you’ve given lower options as well. The middle number should be comfortably between the other two.
Watch and listen when you throw out the range. Often the most valuable feedback will be non-verbal. As a contractor client of mine said, “Look to see if their face gets all scrunchy when you mention the big number.” Do they look shocked? Or do they seem to genuinely consider the biggest option?
Typically prospects will choose one of the three that is closest to what they were thinking, often with some additional negotiation. For example, “well probably closer to $5,000… although that may still be on the high side.” This is everything you need to make an effective proposal.
Offer Options in Your Final Proposal
Now that you have a ballpark range, you can hone in on the budget by offering three different package options in your proposal, with more gradual addons. These options should be closer together than the big range you used above, and should showcase more of the value you’d bring, than the dollar figure stamped at the bottom.
Always make the top tier option the “dream” option. I taught this to the owner of a popular blog and she was shocked when an advertiser picked a package way bigger than she’d sold before. It raised her confidence up, so she put an even bigger option in a future proposal and, before long, somebody bought that one too!
Share Your Thoughts
What have you found effective in teasing the budget out of a prospect? Do you have an awesome success story or an awesome horror story? Let us know in the discussion below.
This is an archived post from the FreshBooks Blog and was originally published in November 2014.
About the author: Evan Horowitz empowers successful small businesses to grow much faster than ever before. His clients have a dream that’s bigger than their business experience, and Evan brings his experience: his Harvard MBA and 10 years running businesses as big as hundred-million dollar global businesses. With Evan’s help, small business owners become smarter CEOs, and grow their businesses faster, with less stress, than ever before. Get a free copy of Evan’s ebook, “Four Secrets to Grow Your Business Like a CEO,” at www.EHAdvising.com