Today we look at the fourth and last question you should ask on every sales call.
Question # 4 is, “What is your budget for this project?”
Many contractors are convinced they can’t ask a customer for their budget because the customer either won’t tell them or the customer will be offended by the question. Neither is true. As I mentioned in my last post, you have to be tuned in before you ask this question. If you asked the first three questions and listened to their responses, you should know pretty well at this point how to approach this subject.
Preparing for the budget question is important. “John, Mary, we’ve talked about what you want to do, your start date and your decision making process for this job. As you know, when you purchase anything, at some point you have to talk about the money involved. That said, do you mind if we talk about the budget so I can better prepare the design for your new kitchen?” You should always ask for permission to talk about money before you ask your budget questions.
Make it a yes/no question. Don’t ask for permission in a way that allows wiggle room – you need to hear a clear answer. Almost always, what you will hear is “yes” or “sure.”
That’s when you ask about their budget, and be sure the phrasing is correct. “What is your budget for this job? Now, please remember I am not asking you what you think the job will COST. I know you don’t know what it will COST and I don’t know what it will COST either until we complete the design and I have compiled my estimate. What I am asking you for is your budget. What would you like to invest in your new kitchen?”
Wording that question just as you read it will eliminate over 95% of the dodges that will be thrown at you. Remember, you are not asking what they think the job will COST, you are asking for their budget. The cost of a job is largely determined by the design of the project and the selections they make. Worded properly, they will either give you a number or tell you they don’t have a budget.
If they tell you they don’t have a budget, that’s probably not the truth. They do have a budget; they know what they want to spend. But it is hard to tell someone that you are hoping to build a relationship with that they are not telling the truth. So help them establish their budget by giving them 3 potential price ranges for their job. First the medium price range, then high, then low, and in that order. Ask them to choose their price range. Get the budget set before you commit to doing any drawings or estimating.
Not asking for the budget and staying with the question until you know how much they want to invest is important. Without it, you’ve had a nice visit and have nothing to show for it. Until the budget has been set, you have no idea in the world how to design their job or that they are even ready to purchase your services.
We discuss these four questions in depth, with many of the nuances that go with them in our book “Profitable Sales; A Contractor’s Guide”.
(http://www.markupandprofit.com/sales_book.html)
Today we look at the fourth and last question you should ask on every sales call.
Question # 4 is, “What is your budget for this project?”
Many contractors are convinced they can’t ask a customer for their budget because the customer either won’t tell them or the customer will be offended by the question. Neither is true. As I mentioned in my last post, you have to be tuned in before you ask this question. If you asked the first three questions and listened to their responses, you should know pretty well at this point how to approach this subject.
Preparing for the budget question is important. “John, Mary, we’ve talked about what you want to do, your start date and your decision making process for this job. As you know, when you purchase anything, at some point you have to talk about the money involved. That said, do you mind if we talk about the budget so I can better prepare the design for your new kitchen?” You should always ask for permission to talk about money before you ask your budget questions.
Make it a yes/no question. Don’t ask for permission in a way that allows wiggle room – you need to hear a clear answer. Almost always, what you will hear is “yes” or “sure.”
That’s when you ask about their budget, and be sure the phrasing is correct. “What is your budget for this job? Now, please remember I am not asking you what you think the job will COST. I know you don’t know what it will COST and I don’t know what it will COST either until we complete the design and I have compiled my estimate. What I am asking you for is your budget. What would you like to invest in your new kitchen?”
Wording that question just as you read it will eliminate over 95% of the dodges that will be thrown at you. Remember, you are not asking what they think the job will COST, you are asking for their budget. The cost of a job is largely determined by the design of the project and the selections they make. Worded properly, they will either give you a number or tell you they don’t have a budget.
If they tell you they don’t have a budget, that’s probably not the truth. They do have a budget; they know what they want to spend. But it is hard to tell someone that you are hoping to build a relationship with that they are not telling the truth. So help them establish their budget by giving them 3 potential price ranges for their job. First the medium price range, then high, then low, and in that order. Ask them to choose their price range. Get the budget set before you commit to doing any drawings or estimating.
Not asking for the budget and staying with the question until you know how much they want to invest is important. Without it, you’ve had a nice visit and have nothing to show for it. Until the budget has been set, you have no idea in the world how to design their job or that they are even ready to purchase your services.
We discuss these four questions in depth, with many of the nuances that go with them in our book “Profitable Sales; A Contractor’s Guide”. (http://www.markupandprofit.com/sales_book.html)
{ 2 comments… read them below or add one }
I have always hated this question coming from the salesman. It is a good way for them to know “how much money is there for the taking”. This allows the salesman to “adopt” the price of a product or a service that will result in the most optimum profit margin for the salesman and least optimum for you the client – otherwise known as subjective pricing (charging Mary and James different prices for the same product/service based on their budget)
By answering this single question the client losses his most valuable negotiation tool! From here onwards he is at the mercy of the salesamen.
A client should never answer this question if he wants to get value for his money (or be ripped off in some cases). There are several ways of dodging this direct attempt to rob the client of his god giveb advantage:
Question: “What is your budget”
Answer: “Still not sure,can you help by telling me what is your profit margin on this product/service and how much you expect to net from it?”
The above answer is exactly the same question as “What is your budget” but in reverse. If they can ask you, then why shouldnt you also ask them?
Justme:
I suppose you could take that approach in all your business dealings, but in construction, an adversarial relationship isn’t a great way to operate. And most good contractors will simply walk away. Let me explain.
On a sales call, the project exists in the clients mind only – or in drawings on paper. There are a lot of decisions that must be made before the cost of the job can be determined. Getting the budget set allows the construction company to design the clients job so that the job fits the budget. All too often the contractor is supposed to figure out how to make a $60,000 dollar job fit a $20,000 budget – only he doesn’t know it’s a $20,000 budget until he’s done the work to estimate the job the client imagines. Too much unprofitable time is wasted, and it seldom leads to a job being built. This is when the contractor normally hears, “Your price is too high.”
Clients set the budget for the job based on their design and their selection of the materials that go into the job. How a contractors cost of doing business can be construed as the contractor gouging has always been a mystery to me. The reality is that over 90% of all construction related business failures are due to the contractor not charging enough for the work or service they provide.
With a budget in mind, the contractor can design the job to include as many of the owner’s priorities as possible, and working together they get the job done in a win-win fashion. I deal with contractors in the US, Canada and 18 other countries around the world. This approach works, literally world wide. An adversarial approach to dealing with a good contractor never works. If you don’t trust the contractor you are talking with at the beginning of the relationship, why would you want them working in your home?
And by the way, it is SELDOM that a potential client has a $60,000 budget for a $20,000 job. In almost all cases, the contractor has to scale the job down to meet the client’s budget.
Michael