Talking money: Three ways to uncover a client's budget
As an IT Solution Provider or Managed Service Provider (MSP), whenever you meet a prospective new customer one of the most challenging parts of the conversation can surround uncovering the client's budget.
The prospect has a challenge in their business, and has called you because they hope you can help them resolve it. You’re happy to do that if you’re able to, but you aren’t going to give up your time for free. So you ask the client if they’ve considered a budget for this work.
The most common answer to this question by a prospect is “No, not really.”
Now the prospect may not have a very firm figure in their head, but they’ve nearly always got a rough idea. However they may not want to share this with you because their fear is that you might have been willing to help them with their challenge for a lot less than the figure they have in mind.
From your perspective, you might find it difficult to put together an estimate for the work because you’ve got lots of calculations to make to arrive at a figure – and IT is a much more complex business than most.
So the client isn’t willing to share his budget, and you aren’t willing to take a wild guess at what it will cost to resolve the client's challenge. You’re at a stalemate. What can you do?
Here are three techniques you can use to help uncover a client's budget.
Can you share with me in round figures?
Instead of asking the prospect what their budget is, ask them if they’d mind sharing with you “in round figures” what their budget is.
This softening statement will often put the prospect at ease, showing that you’re talking in broad general terms rather than in specifics.
Likewise, you can share with the client “in round figures” what you’d expect the work to cost.
Neither of you are holding the other to hard costs, and so the negotiation can now begin.
The bracketing technique
So the prospect wants an estimate from you, and encourages you by telling you: “We won’t hold you to it”. However you know from experience that if you quote a figure and later on that figure rises, the prospect will grumble.
One way to avoid this is to use the bracketing technique.
You’ve probably got a very rough idea of the cheapest you could do the work for – let’s say $2000 – and alternatively, an upper figure you’d like to do the work for in a perfect world – let’s say $5000.
Offer to the prospect that, based on previous experience working with other clients who had similar challenges to them, the work will cost between $2000-$3000, or between $4000-$5000.
You’re doing two things here. You’re not committing to a hard figure that you can beaten up on later, and you’re demonstrating to the prospect that you have previous experience solving a similar challenge.
Interestingly, you’d assume that everyone would go for the cheapest cost. And they might. But many times I’ve seen a client who was reluctant to share their budget earlier in the conversation pick the more expensive figure and say, “That’s great, we had budgeted $4500 for this work."
Try it and see!
What don’t you want to pay
I learned this technique from a Shopkeeper who shared with me a story of a man visiting his store and telling the shopkeeper that he wanted to buy his wife a new handbag for her birthday.
“Do you have a budget in mind?” asked the Shopkeeper. “I’ve no idea,” offered the man.
“Let me show you these handbags then, starting at $1000."
“Oh my no,” said the man. “I was thinking more of $100."
If a prospect tells you that they have “no idea” of their budget, offer them the highest figure for the work you’d charge – and then some.
When, as they typically will, they share that they didn’t want to pay that much, ask them again what they had in mind. They’ll share their realistic budget with you.
A conversation with any prospect must tackle the sticky subject of money.
Many of us are uncomfortable talking about money, but the reality is that if the prospect doesn’t have the budget required to hire you to do the work, you’re wasting your time and their's continuing the conversation.
Using the three techniques listed above, you can help the client to share their budgets with you, and get a much better idea of whether you’ll be able to help them or not.