“So what’s the budget?”
If you have any dealings with a potential client in the proposal phase, just the mere thought of this question may give you chills. It is baffling how we, as business professionals and owners (many of whom have invested their life’s savings to start their business) cower at the thought of asking for the budget. So why does asking for the budget create so much dread?
It’s all about confidence.
I’m not talking about the confidence to speak the words. I am referring to the confidence in ourselves and our abilities to deliver. Any seasoned salesperson will tell you that they don’t sell anything. They give potential buyers the opportunity to buy.
To understand this, first, we must delve into the psyche of a potential client.
Have you ever heard of “Lizard Brain”? I’m not referring to what you called your little sister, I’m talking about the most basic parts of our brain.
According to Dr. Joseph Troncale, in an article for Psychology Today, the “Lizard Brain” refers to the oldest part of the brain, the brain stem, and is responsible for primitive survival instincts such as aggression and fear (fight or flight). It is this part of the brain that is activated in your client long before the conversation about price even shows up.
Every transaction has a seller and a buyer. The buyer is always on guard. Think back to the last time you purchased a car. You were filled with such a sense of excitement for purchasing a car, but also the fear and dread of having to deal with the salesperson. When the salesperson starts walking towards us, our heart rate increases and we begin thinking of how this person is going to take advantage of us. This is your “Lizard Brain” being activated and preparing to do its job of protecting you.
Don’t Break the Bank
Now let’s take this same car-buying scenario and look at it a little differently.
When the salesperson asks you what you are looking for, you can easily reply that you want an SUV, a sports-car, or a sedan. You have now given the provider valuable information on what types of vehicles to show you. The next thing to come out of their mouths will be about price. They will ask you how much were you looking to spend, and if you plan on financing or purchasing the vehicle outright.
This is when we typically shutdown. Your fear is if he knows how much your budget is, that he will only show you vehicles at the top end of what you are willing to spend.
Now let’s look at this from your client’s point of view. It’s understandable that they would be nervous and reluctant to reveal their budget early in the process. That’s that lizard brain we spoke of earlier. It’s not their fault.
What we, as providers, need to do is to alleviate those fears. That comes with truly believing that you offer a quality product or service.
Information is your best friend. You want to get as much information from the client as possible. We all run into clients from time to time that aren’t really sure what they want. Those are tricky. You may have just come across someone who will let you take your skill and expertise to create something great, all the while, trusting you with a reasonable budget. Then other times you may end up with a client that really doesn’t know what they want and end up micro-managing the entire project.
Prodding for more information is the best way to begin to understand what type of client you will be working with. It also lets you begin to get a scope on what their expectations are. As we mentioned before, there is no sense in showing them a Mercedes when their budget only allows for a Chevy… and a used one at that!
Ask them to show you some sample projects that they are hoping theirs will look like. You should be able to look at these samples and have a general idea of what something like that would cost, then relay that cost to them. Now you are helping them see what they are looking at in terms of a reasonable budget.
At this phase, you will often find that they are willing to scale down their expectations to get closer to a budget that they are comfortable with.
Another thing you can try is to show them similar projects that you have done in the past. And don’t be shy. Tell them what the budget was for that project. This gives them the courtesy of having a general idea of what your costs ranges would be. It is important to always follow up with them, asking for their budget again. Once they start hearing numbers from similar projects, it starts to loosen the lock they have on their number.
If they know that similar projects cost $10k, for instance, they may come back and say that they only have $5k to spend. Now you have gotten the information that you need. You can go from there in writing up a proposal that is more within their means.
A Confidence Game
Don’t be afraid to walk away. A client keeping things hidden today will be the same client who will ask you to “add one small thing” to the project, without wanting to be charged for it. If you have any inkling that you may be dealing with that type of client, walk away. At the very least, make sure every detail is spelled out in your proposal and walk through the proposal line by line with them.
One last thing that has worked often for me is simply asking, “What do I need to do to earn your business?” You will be surprised at how many clients who were hiding their budgets, will then come right out and tell you. I am not sure if it is the boldness of the question or if it is because they fear you walking away.
Just remember that you are interviewing each other! If neither side sees it as a good fit, the deal should not happen