EG118: never ask customers "what is your budget?"

We all have this image of the ideal buyer at the first meeting.

Decision maker?

with authority to purchase,?

who has an urgent need?

and a budget already allocated for solving the problem.?

Problem for which you have the right answer.

And we have all heard the advice to ask about their budget as early as possible in the conversation, to avoid losing time with prospects that can’t afford your services.

?

Unfortunately, if you ask “what is your budget for this?” and expect to hear a fairly large number that would cover what for you would be a “large project”, you might be disappointed.

Depending on who you are talking to, they might not have a budget allocated.

Or there is a budget, but the person in front of you doesn’t know it or she doesn’t have the authority to disclose it.

Or she just doesn’t want to share it.

Depending on the type of customers you are selling to, there are also a few structural aspects to consider.

In the case of multinational corporations and large regional companies, the people with internal budgets authority rarely talk with potential new vendors. In many cases, you never get to talk to the vice-president or the director that is the economic buyer and budget holder.

For medium-sized companies and high-growth scaleups you might be talking with a budget holder, but there will probably not be a formal budget allocated, as they typically solve problems as they arrive on their list of priorities, not based on last year’s budget.

As for startups, the answer will be “the budget is as low as possible, we have so many other things to spend money on”.

If you look back at your past successful projects, you might discover that many of them started from conversations where the client did not have an approved budget from the first meeting. Or their allocated budget was much lower than the amount they ended up paying to you.

So what should you do in a discovery meeting if you can’t ask about the budget?

Two things, without exception.

First, you can proactively give a range of budgets for similar projects.

And you can try to understand their context, to estimate the metrics that will help you quantify economic value.

Doing these in every first meeting will help you achieve several outcomes.

You can qualify the opportunity, based on their reaction to the range of pricing that you communicate.

If the prospect is not the right fit for you, you will discover this quickly.

You will set expectations for the next conversations and avoid the unpleasant surprises that happen when the client sees the financial proposal after multiple conversations, only to realise that the budget is way outside their range of possibilities.

You move to the next steps in the sales process with a better understanding of their financial situation and with the confidence that if you spend the time and effort needed to show the value of your services, there is a good chance that pricing will not be an obstacle.