Asking For Budgets
- Dan Greenberg
- Jan 10
- 4 min read
As you might imagine if you have read my past posts, I want to start the budget chapter by considering what the buyer is thinking about when a seller asks them for their budget. When most sellers ask for a budget, they ask it as one of a long string of questions that they had prepared to ask in discovery, and it is usually somewhat disjointed from the value conversation. This method of asking for a budget will cause most buyers to think something along the lines of the following; “this guy just wants to know how much money I have so he can start to think about how much of it he can get his hands on”. Sometimes this is a very conscious thought on the part of the buyer, but most of the time it is a bit more below the surface. Regardless, it affects the relationship, and definitely not in a positive way.
Worse however, than the effect on the relationship, and the interaction, is the action it causes the buyer to take. The buyer has no incentive at this point to share a helpful or conversationally progressive answer with the seller, because the buyer has framed the seller’s question for themself, in their own head, since the seller did not frame it for them. The frame in the buyer's head is all about what the seller wants, so there is no incentive for the buyer to cooperate. Even more proactively, many buyers will start to think that if the seller is setting themselves up to talk about what they want, “maybe I should be doing the same thing”. So, they low-ball the answer. The first thing this does for the buyer is it allows them to position themselves for a potential price negotiation. The second thing it does for them, is it allows them to feel secure in their sense of control because they have just withheld information, and the third, and most important thing that this does for them is it allows them to show off or gain internal power by positioning themself as the hard ball player who is outsmarting the vendor.
Regardless of all the advantages that this has for the buyer, it hurts the conversation, and the likelihood of a positive outcome, and a deal, not to mention, the fact that a completed deal will likely be at a lower dollar value even if it gets done. For one thing, when this happens, the seller does not have an accurate number to work off of, and cannot put together appropriate packages, and offerings that make sense for the real budget. But of a much more consequential nature, once the buyer has taken a stand on budget, they have entrenched themselves in that assertion, at least to some degree. For a buyer, finding more budget when you have not previously stated a limit makes you a hero, but finding more budget when you have already stated a limit makes you a flip flopper, and even worse, a softy or a bad negotiator. If a buyer states a max budget and then goes back on that limit they have forfeited all of the above mentioned security, sense of control, and enhanced social standing within the buying organization that they earned by setting that limit in the first place.
For all of the above reasons, it is so important to avoid a situation in which you ask the buyer for a budget with lack of context, and lack of conversational framing. If you have been reading my past posts, I may sound like a broken record by saying this, but what needs to be done is that the seller needs to reframe the ‘budget ask’ by getting back to the problem and the ideal outcome for the buyer. The client must be thinking about the problem and the world they want to get to before they think about the budget; that context is key in order to get a real and honest answer that helps move the conversation along.
In fact, you don’t even really want to ask the budget question in so many words. Your lead in to the budget conversation should sound more like the following: “Given the conversation we just had, what is the monetary value of that ideal outcome that you are hoping to get to in the relatively near future? Can you put a price tag on it and does it even make sense for your business to think about solving it with a third party solution?” What you have done here is asked the buyer to wade into the budget conversation in the context of their problem and their ideal solution, and not in a vacuum. More importantly, you have done your best to associate them spending money with the outcome itself, not with your “greedy” revenue goals. Of course people are not stupid, and you are not pulling a fast one on the buyer. They still know they are talking to a person who wants something, but context and association matter, and can elicit big differences in responses.
If you don’t ask the right set of questions, and you are not able to get an understanding of the client’s budget, as well as other potential budgets that can be drawn from, and all the dependencies, you are not doing your job. However, if you have to ask the question directly, you also did not do your job. It is incumbent upon a seller to facilitate conversations that start with problems, advance to desired outcomes, and contextually value the two so that an understanding of the negative value of the problem, and the positive value of the desired solution are understood. Then, within that context, the available budget can be compared to the price tag.
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