"What's Your Budget?" 3 Tips for Budget Conversations

Many of my clients struggle with the "what's your budget" conversation when talking with potential new clients. Many times, the prospect either says "I don't have a budget" or something like "it all depends on the value." 

While I understand, after being on both sides of the fence (selling and being sold to), that often times you may NOT have a budget, I also understand that without the guardrails of a budget range, it can be challenging to deliver an appropriately scoped (and moreover, priced) bid. 

Here are a few tips that have helped me in difficult sales calls where budget seems an elusive subject:

1- Do Not Exceed Amount

My first recommendation is to typically ask in an initial conversation, if the potential client has a "do not exceed" amount. Even if a client doesn't have a clear budget, they may have an amount that they've been told is the limit.

2 - Total Annual Budget

Another tactic I've used is asking if they can share what their annual marketing budget is. While that may seem relatively unhelpful, I've found that it provides me enough information so I can back in to a justified budget. For example, if their annual budget is $150k, and the website project their discussing with you is clearly $100k or above, you know that this is likely an unrealistic budget to be approved. Make sense? Or, alternately, if they're looking for a marketing program and you know they have $150k for a budget, and 3 - 4 other large priorities for the year, you can make a loose assumption that this program should represent 25 - 30% of their total annual spend. This percentage can shift based on importance and value of each priority.

2 - Apples and Pomegranates

Another tool I use is to ask who else the potential client is talking to. I make sure to emphasize that my intention in asking is to have as much information as possible and make sure we're playing the same game. If we're discussing a website project, and my firm's average engagement is more than $100k, and all the other folks they're having conversations with are freelancers, then I know we are not speaking the same language. This can help you and the potential client get clear on what they're looking for and what they can expect from your bid — long before you spend hours on an estimate and/or pitch.

Overall, I've found that being respectful, clear and direct makes the best use of both their and my time. Sometimes this works, sometimes it doesn't. But, I will say that the potential client respects the directness and transparency and it serves to set a good tone for our communication going forward. Whether or not we end up working together.

How do you approach the "budget" question in sales conversations? Do you feel that getting budget clarity has helped you scope and bid more effectively? Are there any downsides to being so deliberate in this request?