I looked at the number he suggested. It was twice my published hourly rate. (When I first started out, instead of asking for the client’s budget, I let them propose a rate – just a hint, that didn’t work out.)
The project was a refresh of a website with a lot of potential for fun work. You know, the kind you hope for when a client comes along. And the client-to-be was a pleasant man who was easy to talk to. Bonus!
I’d already started thinking about the money I could make on the job.
“No, no,” he spluttered, “That’s all I’m going to pay for this project. It shouldn’t be too hard. It should only take a few hours.”
This was years ago, and I had spent a good deal of time emailing back and forth, and then another hour on the phone with this man. We were on yet another call to clarify things, before the rates discussion came up. I was already probably 3 hours of time & energy into this project, and he wasn’t even wanting to pay enough to cover those 3 hours.
This was an extreme case, but do you know what I used to do when someone said they couldn’t afford the price I proposed? I either dropped the price, or tried to justify my price to them by talking through the deliverables. WRONG!
Finally, I realize that the prospective client and I were just a mis-match. My price reflected my value, and his desired price reflected how much he valued web design. Nothing was wrong with either, and my scramble to drop my price or justify did nothing but devalue my own work.
Ask the client’s budget early – don’t want to waste your time or theirs!
The obvious way around this is just to ask. Many folks will already have a budget allocation for the services you’re offering. And I’ve found that most will happily tell you.
But, even when a lead doesn’t really know how much she should budget for your service, she can generally come up with a range. She knows she doesn’t want entry-level work, so it will likely be more that $X, and she also knows how much is too much $XXXXXXX.
Once you have a number or a range to work with, you know what you can propose to that lead. Personally, if the fastest & easiest solution (for the client) isn’t within her stated budget, I still like to propose it. I know how much I can help her! But I also propose something in line with her budget. It might be a small product, or approaching the solution in stages.
How to ask for the client’s budget – so hard!
If you’re thinking it’s just too hard to do, take it from me, a recovering “non-confrontational at all costs” kind of person, you can do it. Here’s how.
First, read my article for lots of passive ways to prequalify leads. You don’t want to actually spend much time on leads who aren’t even close to your ideal client. That would be a disservice to them, and it would waste time for you, and honestly would be a disappointing experience for both of you.
You can make the budget question much easier if you do indicate your pricing on your marketing materials, particularly your website. If you can’t give exact pricing, list a range, or a “starting at…” pricing. Not everyone agrees with this, but if time is your scarcest resource (and hint…it is for everyone, really. It’s the only finite thing), then I think posting pricing is helpful to everyone.
I know that when I’m a customer, I like to know what price range I’m in. I hate being shocked by a price, or feeling out of place because I didn’t know how much things would cost. Lots of clients feel the same way.
Ask with a mindset of caring and helpfulness
It’s easier to ask a lead or client about budgets if you ask with a mindset of caring and helpfulness. I’m amazed at how different a simple question can be depending on the intent behind it. I believe other people can pick up your intent. Somehow you project your own feelings around what you say.
If you’re nervous about asking for the budget, you’re going to make your lead nervous too. She’ll sense your unease and wonder about the cause.
Plus, if you know a lead’s budget you can propose a solution that fits. You won’t waste time proposing something they can’t fit in this year. Knowing that this question allows you to help your lead, can make it easier to ask.
The Shut-Up Technique
When leads seem reluctant to talk about budget or to give you their real budget numbers, I remind them that solutions can be had at any dollar amount, but I need to know their budget so I know which solutions might be right for them. Then I use the shut-up technique.
Originally, I learned this technique as a negotiation tactic. I think I first heard it during a seminar in negotiation that my corporate job put on. Later, Dave Ramsey reminded me of the technique on his radio show, and I’ve been able to buy and sell a couple of cars successfully using it. I am *not* a great negotiator – but this is an easy tactic, and just requires a bit of self control.
Most recently, Mike Killen reminded me that the shut-up technique could be used during an uncomfortable budget discussion. And, turns out, it works.
All you have to do is ask the question, and then stop talking until the other party comes up with a real answer. I like this because I don’t have to remember lines or conditional responses, I can just focus on one thing – being quiet.
No one likes the awkward stall in conversation, and if you can stay quiet, the other person will likely come up with a number to relieve the uncomfortable silence.
This works out best for both of you – you’re not tricking the other person or playing games. To move forward and save everyone’s time and frustration, you need a number to discuss.
Value pricing experts disagree with this
Some marketing folks I follow completely disagree with asking budget numbers in early discussions with leads. In fact, they discourage asking about the budget at all. Instead, they use value-based pricing to make the sale of their services a no-brainer for the client.
At a high level, they first find out how much value the work they do will bring to the client. Then, they price their services to be a percentage of the value they’re bringing. I’m personally not comfortable doing this for a few reasons: it makes it much harder for me to plan and budget, it doesn’t feel quite right to me to charge different amounts to different clients (my own hang-up, I realize!), value I provide to the client and value the client realizes from my work are two different things, and I cannot control how the client utilizes what I provide/build for them, and finally, it takes a time investment to determine value to the client that is wasted if the client selects someone else.
If value-based pricing is your thing, awesome, use it. It’s just not right for me, right now.
Rip off the band-aid!
Suck it up, buttercup, and ask. Which is more important to you? Being comfortable or saving time, making more money, and helping your client?
I’m writing this not as an expert, but as someone who’s finally gathered up the courage to do this. Asking the client’s budget, and asking about money in general has saved me time, and opened up time to find the clients who are right for me.
Just last week, I had a client lead fill out an inquiry form. She had typed in $200. I had a feeling I knew what he meant, but instead of guessing, I was so proud that I asked her, “Is this your budget for the entire project, or is this your budget for an hourly rate?”
It was indeed for the entire project – not possible. But I kindly directed her to one of the DIY services and truly wished her the best. I can feel good that I didn’t waste time – mine or hers – and I was able to give her a little bit of advice on the best way for her to proceed.