How to Discover a Client’s Budget

19 April 2011
Posted in Selling and Marketing

The situation is common. You go to a new prospect’s office and spend two hours hearing about their business, what’s important to them, who their clients are, where do they like to vacation and how many kids they have. You then go back and spend about half a day or more on proposing a solution based on what they said they wanted.

Because you’re a designer, you get your proposal all gussied-up on your best letterhead and send it over to the client only to hear back that your proposal is “way” more money than they expected.  Or worse, you never hear back at all.

What makes it worse is that they will often take your proposal to someone who will claim to be able to do it for less money and in less time.

Well, don’t get discouraged yet. This is a very common scenario for web projects and we have some ideas for how to address it by finding out what budget they have before you go to the trouble of proposing a solution they can’t afford.

First of all, did you even ask them?

Many designers are afraid of money. It’s fair, you’re creative. However, to be certain, you are also in business. If you want to create art for art’s sake, do it on the weekend, but if you want to earn a living, start talking money.

Before you even get into what they want, ask them what they are planning to spend. I often start with “Do you have a budget in mind?” or “Have you looked at some solutions already?” or “Would you like me to help guide you on what websites cost?”

All of these are budget conversation starters and need to be asked up front and BEFORE you start talking about what they want.  Why? Because it is really important that you make clear to them that money is the reason you are talking to them. Not passion, or charity, or (and this is common) because they own a high profile business and think everyone wants to do business with them. They need to understand that you are in this to earn a living AND do great work.

Next, ask what solutions they have priced.

You have to face the fact that you are probably not the first person that came to mind when this client started researching a website. Unless you are their partners cousin’s kid, then chances are they have already priced the canned solutions, they have already tried to do it themselves and they are probably planning on getting at least one offshore bid (based on your proposal of course).

So, ask them: “What solutions have you already looked at?” and “Based on what you have already explored, what are you thinking of as a price reasonable range for your project.” This is a great way to get them to offer the famous “ballpark estimate” before they ask you to do it (and we all hate doing that).

The next important thing (see my previous article about price objection) is to address the cheap-o canned solutions and how you can, or cannot, work with those if need be. This is a great way to let the client know that, although you are in this to earn money, you are not going to force them to work within your solution only and that you are flexible and sensitive. If their solution is acceptable, with some professional help, you can price according to that. This is a great way to also win trust as well as avoid shutting yourself out of entry level client projects that could be more work later.

Give them your base pricing.

We have it right on our website. Now, we don’t have it in giant red letters on the home page, but we do list some starting points for web development.  This is a great filter for clients who have already envisioned a really low price.

I know this is scary to do because you then have to face the possibility of criticism, but you are also saving yourself the frustration of facing that criticism on pricing after you have already written a proposal.

So, throw it out there. For example, “If you want a single design concept on a 5 page website site, we usually start those around $2,500.00.”   Or, “Our typical mid-range site is between $5,000 and $7,000.”

This is a great screening method for tight-lipped clients, but be careful to do this only after you have asked them what they think it should cost. You might be pleasantly surprised at the answer you get and it might be a lot more than you think. The best clients always know what it’s worth to do a website and, let’s be honest with each other, we are all pricing ourselves a little low these days.

Finally, lift your skirt a little.

By lifting your skirt, I do not mean sleep with them. What I mean by this is that you offer some information about some of your past work and what you billed. I know everyone is paranoid about this, but if things go as planned they are going to know what you billed anyway. And, if you deliver a proposal, they are going to be sharing your pricing with the world as well.

This step should happen after you have given them some base pricing. Walk them through your best work and tell them what you estimated versus what you wound up billing and why.

I try to include at least one project where I wound up billing less than expected and one where I wound up billing more. I also include one that was a complete disaster, tell them why, tell them what it cost me internally and how things are with the client now. This is a HUGE trust builder and shows that you have been in the trenches.

Addressing the Aftermath

As always, you should NEVER email/mail a proposal and send them on their way. Proposal should always be reviewed live and you should alway cite examples of what you are proposing in your solution so that the client can see and understand what you are proposing. This gives you a chance to show them variations on what you have proposed that can reduce budget as needed and it allows you to show them the trade-offs they will make to save money.

By doing this, you are able to dynamically adjust to budget concerns and remove the risk that they will just discard your proposal and “too expensive”.