Finding out the client’s budget can often be difficult, or even awkward, especially when we don’t know them that well.
It’s a necessary conversation. Once we know the client’s budget we can decide whether we can put together a solution that both fits their needs and makes us a profit.
Remember, the client may also feel reluctant to talk about budgets. Most commonly, they worry that we’ll simply inflate the price of our solution to fit their maximum budget.
Offering three price points is a simple but remarkably effective technique. It allows the client to feel in control, as they are not required to provide an exact amount, whilst giving us a good idea of the range they are considering.
Here, we offer three values; the minimum we will accept to solve the problem, say 20,000; five times the minimum, 100,000; more than ten times the minimum, 250,000.
Explain, “Typically this sort of solution will start at one of three price points, 20,000, 100,000 and 250,000. The last number will be hard to say with a straight face, but will identify a high price in their mind, which makes our perceived value go up.
On hearing the high number, they are likely to say, “there is no way we can spend that”, followed by the maximum amount they are thinking about.
Now we have a good idea of the client’s budget, we can lead the discussion on further.
- How important is a good price to the client compared to other factors, such as quality, the credibility and the capabilities of the potential supplier
This will tell us how flexible the client is on price to get the solution that fits their needs
- Has the budget been prepared and approved?
Until the client’s budget is approved, we’ll have to remember that whatever figure we have been given is still relatively meaningless.