First off, let’s get this out of the way. Everybody has a budget! Now then …
They may not know how much your service will actually cost – Educate them! Most, if not all, buyers today will self-educate with Google. I am certainly no exception. In many cases, this means that I know about as much of what is needed in order to be considered dangerous. Very dangerous.
Of course, this will vary by product, service, and by the buyer’s level of expertise in these areas. Still, as a professional salesperson, one of the ways to differentiate yourself from your competitors will lie in your ability to provide your customers with quality, understandable, education.
They probably don’t want to share it with you – You might spend it all. Maybe yes. Maybe no. Your job is to give them the best solution that meets their needs and that could very well be a product or service that is significantly less than what they are willing to spend.
They do have a good idea of what they are willing to spend – No budget but … I do know how many nickels I have in my pocket. Now, you might find yourself with champagne tastes on a beer budget, but you will never know this until you ask.
They will exceed their budget if perceived benefits exceed additional investment – When was the last time that you bought a car that was at or under your original budget? Be honest! That is not to say that some folks don’t have a hard budget that cannot be exceeded. But, for example, does that total acquisition budget dissolve with attractive financing?
Understand their needs, wants, and desires first
In order for you to even approach the topic of budget, you must first understand their needs, wants, desires, and what they hope to accomplish. This includes their expectations. Then, what happens to them if they don’t make this purchase? How will their business be affected? Finally, what aspects of purchasing are most important to them?
- Are they looking for style … the latest and greatest?
- Is it functionality that floats their boat?
- Maybe it’s ease of implementation or speed of delivery?
- Do they buy on price alone vs. value, quality, or service?
How to ask the big question
“There are multiple ways that we can provide your services and meet your basic needs. All of these require different levels of investment. Before we go any further, might I ask what you have budgeted for this?”
Nothing fancy. Nothing aggressive. Yet, in my experience, most salespeople are uncomfortable with asking this question. Why? Latest statistics have yet to show that any of us have died (salespeople and customers) as a result of this question being asked. However, never fall into the trap of assuming that, budget in hand, all you have to do is meet it!
If needed, throw out a number
“Well, we could spend up to x dollars. Would that work for you?” If no, what would?
Be careful! Only use this if ….
- You have a solid understanding of their needs and your possible solutions.
- You know that this number will be the upper limit of what they could spend.
The last thing you want to end up doing is coming back with a final proposal that will exceed this number, unless their needs have changed, and even then they will likely only remember this number.
True stories
Backfire – I almost got burnt by this once and I was an idiot for getting sucked in. An existing customer called me, told me that they were going to be opening a small chain of mattress stores, and he wanted a sign budget. There are a huge number of variables in electric signs. I got as much information as I could from him.
I knew that this was dangerous and I hemmed and hawed before relenting and throwing out a budgetary number. Naturally, when the time came to design and quote the actual signs, the reality bore little resemblance to what he had told me. He, of course, had no recollection of what we had discussed other than the $ number.
The price was substantially higher and he was quite upset. I got the deal, but only after I suggested that he get competitive quotes. This a very risky move and one I did not want to make. I pointed him to my most expensive competitors and thus managed to dodge the bullet that I had fired at myself. By the way, I was not the low bid. There is no honor in being low bid.
In God’s house – When I was in the commercial A/V business, we met with the pastor of a church in Twin Falls who wanted to upgrade the chapel’s audio and visual systems. After doing our assessment, we asked about their budget. “We don’t have any budget. We have no idea how much this will be?” The second part was true.
“We could spend up to $100,000. Would that work for you?” “$100,000!? The committee decided that we couldn’t spend over $14,000!”. In the church, in front of God, and from the mouth of his servant.