Asking for the Budget: A Flawed Approach?

John Tabita

It was our first official sales call after forming our partnership and we were excited. My new partner and I met the prospect at his home to discuss building him a website.

I had no idea being a professional square dance caller could be such a lucrative profession—that is, until our prospect began telling us how he’s booked months in advance and how he makes money organizing square dance cruises. “I’m the best,” he said, “so my website needs to be the best.”

We envisioned a project to match … custom design, online appointment scheduling, photo gallery and videos—all to which he agreed. Information in hand, we returned home to prepare our killer proposal. A few days later, we quoted him a project cost of $5,000.

Imagine our surprise when he told us he had $500 in mind.

Frustrated, I scoured the message boards, curious to see how others handled this.

  • Ask for the budget early in the sales call
  • Show them how much time is involved so they’ll realize the price they want it for is about $9 an hour
  • Send an angry email “thanking” them for wasting your time and refer him to Guru.com

Thus I learned the all-too-familiar mantra of the service provider: “Always ask for the budget.”

The Budget Question: A Flawed Approach

While asking for the budget is not the worst thing you can do in a sales call, I think the concept is fundamentally flawed. Here’s why:

No Trust

From the client’s perspective, why should he give you any idea of a budget until he’s sure he can trust you? Al Davidson of Strategic Sales & Marketing says many prospects take the budget question to mean “How much can I possibly charge you for this before you’ll run?”

No Due Diligence

Even if the other person has a figure in mind, it’s rarely based on any due diligence on their part. I find that most prospects are embarrassed to even say what they’re thinking, because they know they’re just pulling a number out of a hat, rather than one based on reality or thoughtful business analysis.

No Value

It focuses the prospect’s attention on what he has to spend, rather than what he’s going to get. The subject of cost must be addressed and agreed upon beforehand, but never outside of the context of the prospect’s overall objectives, the value of the project, and his potential return on investment. If you discuss price and budget first—and your price is “too high”—you’ll be forced to talk about value to justify your price. That almost never works.

Asking for the Budget May Actually Hurt the Sale

By asking for the budget, you’re trying to reconcile what you need to make to do the job with what the client is prepared to pay. That always puts you and the prospect in an adversarial relationship. But when you discuss objectives, value and ROI, you become a collaborator, helping your prospect reconcile his vision of what he wants to achieve with what he can actually afford.

The True Decision-Maker Can Simply Add a “Zero” to the Budget

Keep in mind that “budget” is always relative to value. Prospects with a budget of just a few hundred dollars have ended up spending four times that amount because they saw the value in my solution. Money is like time—we spend it on what we value most. If your solution’s value exceeds its cost, your prospect will find the money. So don’t lock yourself into a set price by asking for the budget.

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  • http://www.carlosja.com Carlos

    I don’t ask for the budget anymore stopped asking for 2 years now.. I got sick of the mind number game that’s always played at the negotiation table. Being a Freelance Developer and Designer for 12 years. Its all about what you bring to the table, if you’re confident that you can meet the project, and your portfolio speaks for its self. Name your price and be honest about it.

    At the end of the meeting i either say how much its going to be, straight up tell them my hourly price if they don’t like it tough, i shake their hand wish them luck and i’m out.

  • http://www.netcentrics.co.uk Pete Wright

    A good point, though it gets tricky when the prospect expects vast amounts of bespoke work on a tiny budget. Such prospects can appear so confident (because they haven’t done their research) that it’s easy to waste a lot of time sorting out a quotable specification, only to find they couldn’t even afford the time that took. So I don’t think asking for a “ballpark” budget is necessarily a flawed approach, just not the safest strategy for every prospect. I find most will accept that it’s easier for me to help them make the most of a pre-stated budget, than to quote for a wishlist of features, some of which may be more cost-effective than others. After all, it’s in my interest to keep clients happy.

  • janice

    For a number of reasons I always ask for a budget but firstly it’s requested on a worksheet I ask people to fill in with an accompanying note to say that basically the budget dictates our time spent on the work. If budget is still not indicated on the completed form I would then ask outright but also give some ballpark figures so there is some relative model for them to guage. They may fall in the top budget bracket or in the lower end of the scale, either is fine it’s just the difference in what they get.
    It has to be said in a way as to not let people feel they’re being duped, I think if you’re honest (and you have the backup from a solid portfolio of work) it’s fine to ask for a budget up front.
    I’ve also found that since asking for a budget in advance i’ve saved myself a lot of time wasted in writing up proposals only to find their brother/cousin/cat has told them they can build them a site for £10 and can i beat it :-/

  • http://www.webnology.be Michel

    I never ask for the budget. I found out that, when I did, a few years ago, almost no one replied to that question. They don’t know, or they don’t want to say it. Which is no problem actually. Your goal is to provide them the best possible solution for their needs, and name your price, an honest price, both for the customer and you. Show your expertise, create trust, and all will flow as it should.

  • http://www.pointclickmedia.ca Jeremy

    What I’ve been doing is during the needs analysis meeting I’ve been telling them (once we get an idea of the scope of the project) a number range in the investment they should be expecting to make. Then depending on the reaction we either do the proposal or move on.

    Of course there is always a curve ball that can happen when they ask for something outside the scope of what was originally discussed but I try to make sure people know when they are adding features what it does to a budget.

  • Stevie D

    One way round it is for the designer to give a *price range* … a basic site will cost you $500, a more sophisticated site with extra bells and whistles will cost you $2500, an all-singing all-dancing fully interactive site will cost you $10000 … and that way you can get a feel for where to set your stall without embarrassing the client by (a) asking him to pull a number out of the air, or (b) pitching for something way above their budget or totally inadequate for what they want.

    It highlights your flexibility as a designer … a website isn’t a “one size fits all” prospect, but you are going to tailor the site to meet their needs and budget. It gives a route to opening up a dialogue about what will give them good value for money … maybe they had been hoping for something in the $500 area, but when you explain to them the extra benefits they can get for $2500, show them the increase in ROI and above all justify why it costs five times as much, you’ve got a better chance of convincing them it’s worth spending that bit more.

    But if you go down that route, do present all the options as viable options. Don’t dismiss the basic $500 site as worthless, or your prospects that do only have $500 to spend will take their money elsewhere. Don’t encourage them to go for a flashy highfalutin expensive site when it isn’t going to benefit them … you need to create a site that they, and their finance team, are going to be happy with in the long run.

  • http://www.webmosis.net CMS Dude

    Asking for budget is more of a courtesy to the client than to you.

    If you walk in to a car dealership without knowing how much you can spend … how is the salesperson supposed to know which section of the showroom to direct you to?

    If you spend the whole day asking questions about cars you can’t afford … then you just wasted your own afternoon, along with the saleperson’s. So it’s really more of a courtesy for both parties to make the best possible use of your time.

    If you have no concern or regard for your own time management … then it’s not as much of an issue.

  • http://www.pricklypearmedia.com/ Angelo

    People HATE giving budgets!

    I now have a new approach, I TELL them how much I charge and for what, this is always a rough estimate to begin with. I let them know this changes depending on each situation as no two clients are the same, some might want high SEO others might be more particular with the functionality and/or design, depending.

    Everybody wants the best, but there is no good being offered the best if you can’t afford it. The trouble is that people have little knowledge on the value of a website.

  • http://www.designfacet.com DesignFacet

    I was debating putting in a budget selector on the contact page. Wrote an article and got some great input. You can follow it here. http://www.graphicdesignblender.com/designers-budget-option-contact-form