What I Wish I Had Known When I Graduated College
Better Stakeholder Interviews
Ready. Launch. Update!
Take a Break!
Cognition
Bloodhounding Budgets
Laying the groundwork to earn a respectable wage in any service business can be a cat-and-mouse game. 
I’d like to share a few tactics I’ve picked up over the years that have helped us root out the answer to the queen mother of all biz dev questions: “What’s your budget?”
So, um, what’s your budget?
Finding out the budget for a project can be like trying to get into a speakeasy. Prospects can be very hush-hush about how much money they have to spend, which is very different from how much money they want to spend. We’ve encountered a number of scenarios, including…
- They have an arbitrary number in their head, and they expect you to hit that number without going over. It’s like “The Price Is Right.”
- They have fiscal budget dollars which must be exhausted in a “use it or lose it” scenario. I won’t lie: when this happens, it’s almost as good as having your own Donut Robot. It’s a gift from above. You usually get paid right away—sometimes even before you do the work. In these instances, a prospect is usually pretty up-front, because they want to start quickly and they don’t want to lose funding for the next fiscal year.
- They are basing their budget on quotes they’ve gotten elsewhere, but they don’t tell you. A “we have a number in mind” kind of thing. This makes me insane.
- They simply say “we prefer not to disclose”. Okay, then.
I won’t give you a strategy to overcome each of the above examples, as that’s more of A List Apart kind of thing. But I will share a few nuggets.
We always ask prospects to share their budget with us. It can be as uncomfortable as asking someone to the prom. It’s especially squirmy when it’s the first question you ask, and I believe it should be. Why? Sharing budget information upfront can save inordinate amounts of time. It short-circuits the potential to get mired down in minute project details, meaningless tangents, and back-and-forth emails that don’t lead very far. Time is money. Ask the budget question first and then ask the other questions. When you meet with a Realtor®, they ask what your budget is right up front. You can want all the three car garages, swimming pools, and gourmet kitchens in the world, but if you don’t have the budget for it, the conversations you had getting there are totally moot. They waste energy. We’ve been bitten by the spend-eight-hours-on-a-proposal-to-find-out-they-only-have-two-grand too many times. We don’t stick our finger in that outlet anymore.
A website isn’t an impulse play. It’s not a luxury. It’s usually the cornerstone of a marketing and communications strategy, and in many cases, it’s the entire business. Even if the prospect tells you they don’t have a budget—oh, they have one. And if they’re not willing to tell us what it is, we’ll likely move on to the next opportunity. You’ll see this happen with Requests for Proposals (RFPs) all the time. Some RFPs will want you to fill out background checks for all of your employees, but they won’t tell you what the project budget is. Next.
Brian Hoff does a great job of articulating some reasons why asking for budget information is important. Check it out.
No. What’s your budget, really?
Consider the following. A client says they have $50K for the project. You say that will be tough to hit—not because you’re trying to be a jerk, just because it truly will be tough to hit. So you run your numbers. You come in at $200K. Not even close. If you’re timid or try to be overly accommodating, your immediate instinct is to chop that down closer to $50K, because the client said so.
Stop right there. The art of negotiation requires that one, well, negotiate. Getting budget information is all about having a dialogue. No one likes a business partner who doesn’t ask questions. Tell them nicely that your price is a sucky $200K. The key here is to do so candidly, like you’re sitting on their side of the table and have to approve the budget with them. Admit that you’re way over the mark, and essentially apologize for it. I’ve said, “If you want to tell us to get lost, we understand”. Be on their team.
When you do this, the prospect can say, “Well, we can’t do that—we have to limit it to about half of that.” Half, huh? So the budget isn’t $50K, it’s now $100K. Interesting. So, you go back to the drawing board. Maybe trim some rates a bit if you can, and reduce the scope a bit. You come back with $150K, and you say “That’s the best we can do. Still likely too much, we know, but we really made the effort because we would love the opportunity to work with you”. This scenario has resulted in more than a few prospects saying to us, “Thanks for working with us on this. We’ll re-allocate some dollars to make this work.”
One last quick example. The prospect says, “We’re accustomed to firms charging $75/hour”. That’s fine. I’m accustomed to my martinis slightly dirty. Just because you’re accustomed to something doesn’t make it a rule. Explain why your services cost what they do. Explain what truly differentiates you from your competition. And if you told them your services are $150/hr., come back with $140. It shows you’re making an effort but doesn’t discount your expertise.
Don’t be smarmy. Don’t be curt. Be respectful, be honest, and inform your prospect during the sales process. If you do it right, right from the start, you’ll build mutual respect and communication into the entire project.
We’d love to hear about your techniques. We encourage you to write a response on your own blog and link back to it on Cognition using our handy “Respond on your blog” feature above the tweet box below.
82 Responses
Our next #cognition post by @hoyboy is live, and it's all about 'bloodhounding' project budgets.
Thu, October 14, 2010 11:58:17
I wrote an article for #cognition.
Thu, October 14, 2010 12:14:53
"Finding out the budget for a project can be like trying to get into a speakeasy." (via @happycog)
Thu, October 14, 2010 12:18:15
Excellent post. The Real Estate analogy made a lot sense. Thanks for sharing this information with us. :)
Thu, October 14, 2010 12:22:49
Killer post on an important issue. It took me years of owning my own business to start asking this question of my clients.
Thu, October 14, 2010 12:22:57
More important, gain the client's trust. Their concern is the value they'll get, not the money they'll spend.
Thu, October 14, 2010 12:24:39
I'm going to use the real estate analogy. Good stuff.
Thu, October 14, 2010 12:34:20
Two questions I always ask: What's your budget? And, how many other vendors are you considering for this work?
Thu, October 14, 2010 12:36:36
I try not to shy away from the question, ask them outright and if they done bite I say I start at xx,xxx for projects.
Thu, October 14, 2010 12:36:52
It's crucial to be in the right frame of mind when asking. If you're apologetic or worried clients know. Relax baby!
Thu, October 14, 2010 12:40:41
Asking about budget first and before anything else:
Thu, October 14, 2010 1:03:31
Great post about budgeting on the new Happy Cog blog (say that 3x fast).
Thu, October 14, 2010 1:17:01
@happycog has an incredible #cognition post by @hoyboy about project budgets.
Thu, October 14, 2010 1:27:27
Great insight here, Greg. Thanks.
Thu, October 14, 2010 1:43:24
Great insight into design project budgeting, something that was a struggle early in my career, but isn't perfect yet.
Thu, October 14, 2010 2:03:36
Most excellent advice from @hoyboy on#cognition: "Ask the budget question first and then ask the other questions."
Thu, October 14, 2010 2:29:01
Well said, Mr. Hoy. Here's hoping some smart readers take up your challenge and respond on their blogs.
Thu, October 14, 2010 2:36:05
Get a budget first, ask questions later:
Thu, October 14, 2010 2:46:47
My response to every point raised here was "YES." Being up front about budgets has saved me a lot of time and stress.
Thu, October 14, 2010 2:54:59
http://cog.gd/4o The dreadful budget question...what and how to deal. This article has some good pointers. Kudos @timswan
Thu, October 14, 2010 2:55:24
Great post today by Greg Hoy from Happy Cog regarding project budgets – Bloodhounding Budgets. Budgets are never an easy topic to jump right into, and there are many stigmas we all carry when it comes to cash, especially us creative types. I remember when it was unheard of to wear anything other than salvation army purchases to class and bragging rights went to the person who had the cheapest rent for the biggest warehouse space. However, those art school college days are behind us, and you’re smoking the pipe if you think money and budgets can be left to worry about “later”. More →
Thu, October 14, 2010 2:55:59
Totally agree. An willingness to better meet budget is a great segway to possible additional budget/work down the road.
Thu, October 14, 2010 3:03:52
"Just because you’re accustomed to something doesn’t make it a rule." - well put!
Thu, October 14, 2010 3:04:46
Agree... time is money and its better to know up front how much that budget is... & it's not my greatest skill finding it.
Thu, October 14, 2010 3:12:09
For the health of your biz getting to the “No” quick can be more important than getting to a “yes” Great read#wisehoyboy
Thu, October 14, 2010 3:51:42
Great post. If your prospect doesn't value good design it will be a struggle anyway.
Thu, October 14, 2010 5:02:48
Budget is the first thing to clarify when taking on a new project: Bloodhounding Budgets: /by @hoyboy /via @motherfuton
Thu, October 14, 2010 5:17:26
And for your next article: "Why It Was Such a Terrible Idea to Collocate Our Comments on Twitter." http://cl.ly/2pkq
Thu, October 14, 2010 5:18:42
In picking up on Greg Hoy's recent post on Cognition, I have to say that the budget question is always the first one we pose to potential clients and potential partners (subcontracting is a large part of our work). Why would we ask such an audacious question upfront? Because unless we know a potential client is being serious about their proposal and not just price sniffing we have more productive and lucrative things to do.... More →
Thu, October 14, 2010 5:36:39
Be respectful, be honest
Thu, October 14, 2010 6:09:33
I dig the twitter comments! Have you noticed the font issues for the previous link when scrolling? http://bit.ly/bma3T3
Thu, October 14, 2010 9:32:46
The key is to remember that it's okay if you don't get the project. You can't *always* fit the square in the circle.
Fri, October 15, 2010 12:03:15
I'd love to have Happy Cog work on my projects.. Wish I had the budget!
Fri, October 15, 2010 3:17:21
Very good thoughts here on trying to find out [potential] client budgets:
Fri, October 15, 2010 9:21:51
My response to @hoyboy's #cognition entry "Bloodhounding Budgets": http://mxv.lt/2qWL. Original:
Fri, October 15, 2010 9:27:33
I couldn’t agree more with his fantastic article, but he missed one part: What if the client’s budget really is “just” $50K? What I’ve done before is sit down with the client and go over the list of everything they want their site to do. Very often, a lot of things on their list don’t have any value to their clients/visitors. Try eliminating these “but the people from sales really wanted it!”-features, and make it work for $50K. ... More →
Fri, October 15, 2010 9:28:02
This is getting to be a good thread on budgets and clients. Latest: http://mxv.lt/2qWL. Original:
Fri, October 15, 2010 9:29:45
Good stuff. Lines up with my mom's advice "It can't hurt to ask. Worst is they say no."
Fri, October 15, 2010 9:39:42
+1 If necessary: don't discount but cut features. Original: and a response: http://mxv.lt/2qWL
Fri, October 15, 2010 9:51:38
This sounds all very reasonable for a hotshot company like yours. Hope it will work for standalone freelancers too.
Fri, October 15, 2010 12:10:05
Dead on! "Time is money. Ask the budget question first...".
Fri, October 15, 2010 12:29:39
We've occasionally ask budget, but based on this post I think we should make it a priority. A top 5 client question.
Fri, October 15, 2010 2:25:35
This is great insight Greg. I always enjoy reading how you guys handle the awkward conversations that many of us fail at.
Fri, October 15, 2010 3:40:04
Great article on budgeting, but I think I'm with @jcroft, the tweet comments isn't really working effectively.
Fri, October 15, 2010 3:43:00
A great post on pricing with integrity and mutual understanding, feels good.
Fri, October 15, 2010 5:20:45
This is a test of Cognition
Fri, October 15, 2010 8:39:31
this issue of knowing the #budget upfront is one I come against with EVERY client although never talking about £150k!
Mon, October 18, 2010 10:14:29
Happy Cog’s Greg Hoy posted a must-read post that covers a profoundly important topic for consultancies: how to avoid the apocalyptic scenario of not charging enough. Or as Greg coyly phrases it: “What’s your budget?” If you sell your time and services to anyone you don’t want to miss it. Greg shares some great tips. More →
Mon, October 18, 2010 12:56:43
Interessant artikel over budgetten!
Mon, October 18, 2010 2:41:08
Great post from @hoyboy on talking budgets with customers. Good read:
Tue, October 19, 2010 7:26:18
Just finished reading: Bloodhounding Budgets. Informative.
Tue, October 19, 2010 7:34:46
Beautiful article that investigates the age old question: "What's your budget". Well written and executed.
Tue, October 19, 2010 10:00:33
So, um, what’s your budget?
Tue, October 19, 2010 11:28:03
Great read
Tue, October 19, 2010 10:50:05
Great advice, even if you don't have clients with $150K budgets :)
Wed, October 20, 2010 12:53:58
Couldn't agree more. It's the most important question you can ask. A time saver, indeed.
Wed, October 20, 2010 8:44:42
Good article, thanks, @twofish for sharing. I think @alisonpetsky should read it too!
Wed, October 20, 2010 8:54:34
Great advice, even if you don't have clients with $150K budgets :) (via @drawn, @luclatulippe)
Wed, October 20, 2010 9:48:10
Very cool piece
Wed, October 20, 2010 11:23:19
Bloodhounding Budgets (Finding out the budget for a project) <- excellent post by Happy Cog
Tue, October 26, 2010 9:35:58
Great post on Happy Cog's new blog. Also, checkout the comment system. I like how they integrate Twitter.
Tue, October 26, 2010 3:33:31
Very, very informative article about a very important topic. Thanks Greg!
Tue, October 26, 2010 6:59:19
Greg Hoy wrote a post called Bloodhounding Budgets on the smooth new Cognition (Happy Cog) blog. The post has the kind of experience-based insight you’d expect from someone who has surely worked on some serious projects with serious budgets at Happy Cog. This is a followup to what Greg had to say... More →
Tue, October 26, 2010 11:15:42
so well put - much respect. what about when the client admits they don't know what they should be putting down though?
Wed, October 27, 2010 4:02:44
The end of the fiscal year projects were always great.
Sat, October 30, 2010 5:27:59
Solid advice.
Wed, November 03, 2010 4:38:45
I worked in sales for a while and the budget question always had to come up early on. More designers should know this!
Fri, November 05, 2010 11:29:18
Well thought through and to the point. Thanks for this piece of guidance, Greg.
Wed, November 10, 2010 3:12:17
http://cog.gd/4o
Wed, November 10, 2010 5:02:03
Bloodhounding Budgets
Wed, November 24, 2010 11:47:38
test
Mon, December 06, 2010 5:03:24
An excellent post about negotiating project budgets with clients! Good work!
Wed, December 08, 2010 9:55:23
Great article on establishing a clients budget up front, negotiating and keeping them on side.
Fri, December 24, 2010 6:27:19
Great article!
Wed, July 06, 2011 8:59:00
A good article about finding out a client's budget for a project.
Tue, July 12, 2011 6:45:00
Really great article by @hoyboy about talking budgets with clients. Good thoughts about not wasting your time.
Tue, July 12, 2011 11:28:45
Bloodhounding budgets - extracting a budget from an unwilling client @happycog nice site too
Tue, August 02, 2011 6:39:14
Wow, great article! Agree completely. Often difficult to get the budget out, but it saves much time down the road.
Thu, September 08, 2011 11:28:24
More practice, the better when starting off asking for the budget. Still learning - Budget first, questions later - http://t.co/4FjQcgND
Sun, March 11, 2012 11:44:55
I hope some clients read this, not only web designers
Thu, May 24, 2012 4:56:25
Oldie but goodie
Sat, June 16, 2012 8:06:29
No. What’s your budget, really?... A nice article about design work and budgets by #HappyCog http://t.co/7qVw1K5jvN
Thu, March 28, 2013 4:00:15