When and how do you get information on customer's budget? - Page 2 - Contractor Talk - Professional Construction and Remodeling Forum

Mike Finley · 07-15-2009, 07:02 PM

Quote:

Originally Posted by rbsremodeling

Exactly my point so until they give me a scope of work and I price it, their budget is mute.

Budgets are a guideline yes but I exceed budgets daily. Budgets sets limits in their minds I am going to spend 3ok on a bath.

Yeah ok that Sounds good till I get you in the showroom and show you the Toto Neorest 5000

Budgets are just another answer to a question to help you help the customer.

They are meaningful in some circumstances and meaningless in others, but asking about budget just helps paint the whole picture. In some cases they help me close more projects because I can tailer the scope of work more inline with their budget if their budget is for real, in other cases it helps me part company quicker, or in others it has no bearing at all.

Mike Finley · 07-15-2009, 07:05 PM

Quote:

Originally Posted by rbsremodeling

I have found that asking for budget puts most customers on their guard. Very few people can ask tactfully and correctly and get the true numbers.

They will never give you their actual numbers anyone. Take their spoken budget and at 30%

Sometimes, sometimes not, all customers are different in many different ways.

Usually the lower the budget the more concious they will be to stay closer to it. The higher the budget and sometimes there is a lot more flexiblity.

Lower budgets who wanted a heated floor might pass on that option once things start adding up. Higher budgets it's not too rare to hear, well, I've gone this far what's a few more thousand?

silvertree · 07-15-2009, 07:08 PM

Reasons
1. It shows you have a concern for expenses, like they do.
2. Its a good time to offer suggestions based on their homes value and what a reasonable amount should be considered for the remodel.
3. It sets a figure that makes it easier to suggest smart choices.
4. It qualifies if the homeowner is a realist or dreamer.

Objections could be,
1. Unreasonable expectations (great time to fix that)
2. They don't trust you to give a budget. (great time to leave)
3. They don't know and are embarrassed to guess, (c'mon, your a pro, this is the time to win them over with your understanding and knowledge)

Its not if they have a realistic budget, but you know they have thought about cost or you would not be there. Make it easy, as Mike said it could cost from 10K to 100K, you could then add (after seeing what their tastes are like) we have done nice baths that would run from 25K to 50K for a nice home like this. At this point your close to working with them or not.

**Teetorbilt** · 07-15-2009, 07:40 PM

I start with the numbers first, it can save both of us a lot of time and the customer money.

Current remod in point, the husband had grandiose ideas and the wife was unsure about the project (his way). He wanted a $600K remod on a $600-700K house. I had to explain the the neighbourhood would not support a $1M+ home and that he'd never see a ROI.

She agreed with me (she's also the money) and he's ticked off.

Upshot. I got the contract, the soon to be ex is paying all of the draws on time even after hubby ran off with his girlfriend of some time. The final item was news to all.

Mike(VA) · 07-15-2009, 08:50 PM

Mike, I am not afraid to ask the question and not afraid of the answer. Yes, there are many ways to circle back around to the budget question but I am not walking out just because they won't or can't tell me. Like everything else, we have our own ways and I think we all like to see the approach others take. It helps us refine our own methods into something better.

I know there are pros and cons to the whole budget issue. My point in asking the question primarily centered around the fact that some people are afraid to tell us their numbers, others have no clue as to what something costs, and still others have numbers that are way off base. Each situation commands a different approach if one is to succeed. I can't claim to be a seasoned closer but I do ok. I would just like to do better in this area which is why I asked.

rbsremodeling · 07-15-2009, 08:56 PM

Quote:

Originally Posted by silvertree

Reasons
1. It shows you have a concern for expenses, like they do.
2. Its a good time to offer suggestions based on their homes value and what a reasonable amount should be considered for the remodel.
3. It sets a figure that makes it easier to suggest smart choices.
4. It qualifies if the homeowner is a realist or dreamer.

Objections could be,
1. Unreasonable expectations (great time to fix that)
2. They don't trust you to give a budget. (great time to leave)
3. They don't know and are embarrassed to guess, (c'mon, your a pro, this is the time to win them over with your understanding and knowledge)

Its not if they have a realistic budget, but you know they have thought about cost or you would not be there. Make it easy, as Mike said it could cost from 10K to 100K, you could then add (after seeing what their tastes are like) we have done nice baths that would run from 25K to 50K for a nice home like this. At this point your close to working with them or not.

I could careless about those 3. It is not my business and I don't care. Playing devils advocate. Why are those my concern

Scribbles · 07-15-2009, 09:06 PM

Quote:

Originally Posted by silvertree

I feel strongly that asking for a budget is the smart and honest thing to do.

Now, I was at a remodeling site this week that had 10 things you never tell a contractor.
Like

1. How many bids you getting?
2. Have you talked to anyone else?
3. What is your budget? They went on to say if you give a budget then "we" know how much to charge you. Stupid-stupid-stupid!

Can i get the entire list please?

Mike Finley · 07-15-2009, 10:59 PM

Quote:

Originally Posted by Mike(VA)

question primarily centered around the fact that some people are afraid to tell us their numbers, others have no clue as to what something costs, and still others have numbers that are way off base. Each situation commands a different approach if one is to succeed.

I know you refuse to believe the answer to your questin is as simple as it is. But it makes no difference if a customer is afraid to tell you their numbers, has a number that is way off or have no clue. If you want to know what that number is just keep asking until they tell you.

I have yet to ask someone more than 3 times. 99% of them will tell you after the 2nd time you ask them.

Try it, then come back and tell us how simple it is.

silvertree · 07-16-2009, 06:17 AM

Quote:

Originally Posted by rbsremodeling

I could careless about those 3. It is not my business and I don't care. Playing devils advocate. Why are those my concern

Rory I don't have to explain those to you, they are good reasons and all could put you in a more favorable position. Plus its helpful for the HO.

Mike(VA) · 07-16-2009, 06:57 AM

Mike, I respect and admire your experience and expertise but please don't make assumptions about what I may or may not be able to believe in. Yes, I can ask a customer as many times as necessary to give me a number but that number will probably be meaningless. It does, however, give me an idea of their thoughts on the project.

Say, for example, I am looking at a 2000 sf basement remodel or new build out. I listen to what they want as most have collected pictures, ideas, etc. When the time is appropriate, I ask if they have considered the cost of the project and what they think it may run. For someone who says 'we have no idea', or 'we''ll just wait and see', or 'about 20K since that is what our last one cost', or any other answer, my approach at that point will be determined by their answer. No, its not just as simple as getting 'an' answer or leaving if they don't give one. There is money on the table (usually) and it is my job to not leave any there.

All I was looking for in the OP was how do different people get the numbers and work with HO's to establish realistic budgets.

Yes, if I charged for estimates and plans, etc, I will make some money even if they don't proceed with the project. My goal, however, is to do the work not just get paid for an estimate. Trying to find a way to EFFECTIVELY ascertain how much they have available to spend goes a long way to reaching my goal as well as allowing me to adjust the scope to fit their budget.

knoxwindowdude · 07-16-2009, 07:19 AM

Up untill this year i was not very agressive on finding out the budget, but im really glad i do now. Before most people were able to get a loan from their bank at anytime with almost no questions. Now it is better to find out upfront before wasting both of our time if they can get to any money.
After getting to the reason you are their and finding out the job scope (ie: kitchen) I will say: "We have done this job from $8000 to $15000 OR we have done this size kitchen from $21000 to $60000. Where do you think your budget fits in" They tell me every time with no hesitation and they are always happy I asked.

Mike Finley · 07-16-2009, 07:54 AM

This is the first time I have seen you ask this in this thread:

Quote:

Originally Posted by Mike(VA)

.

All I was looking for in the OP was how do different people get the numbers and work with HO's to establish realistic budgets.

That's quite a different question then what you've asked up till now, which is:

Quote:

Problem is when you get customers who will not tell you either because they are afraid of you taking advantage of them or they just plain have no clue how much a job might cost. What do you do with these people?

Now working with HO's to establish realistic budgets is an entirely different thing altogether then simply finding out what thier first pass budget number is, whether it's realistic, a guarded state secret or have no clue.

silvertree · 07-16-2009, 08:17 AM

When I sold cars you asked what price range (budget). You may only get 2 or 3 people that day so why lose a walk on while being busy with a young couple with the guy looking at a loaded Nissan 280 when the woman was looking at a used Pathfinder to jockey the kids around.
The budget helped guide people to what they could afford.
Saved time, saved money and on to the next one.

I have had people tell me cost is no concern, that's a big fat lie. Unless they won the lottery people with money have budgets because they understand how you get and keep money.
People who need to watch money are usually relieved to have some real figures to make an informed decision.
People looking for the cheapest price are hard to satisfy and have a lifetime of getting less than what they want. They may want a prize winning design, but they get junk because they paid for junk.

dave3717 · 07-16-2009, 08:21 AM

Finding out the budget is a must. You'll sell more jobs if you know what people expect. Oh yeah, with selling more jobs comes wasting less time. (which everyone has heard is money).

Anyway try explaining to the "hesitant people" that there are many different materials that can go into a project, such as laminate tops vs granite. Costs vary widely and to do the best job for them and offer them all their options you must know that budget number.

If they are still unwilling and you know an average project cost, I'd tell them, "an average project like this costs $25,000, is that something you can work with?"

You should get this done by the time your first meeting is over. If the cost is way out of their reach you don't want to spend a lot of time estimating.

Another option is to charge a fee for the estimate. Now if they don't tell you the budget and the cost is way to high you still get paid :-)

Mike(VA) · 07-16-2009, 09:58 AM

When and how do you get information on customer's budget?
Some people are afraid to ask what their customer's budget is and some ask too late. When do you ask and how do you ask? It is definitely more critical to ascertain a customer's budget early on for larger jobs, but do you ask for every job?

I suppose I have morphed this into a bit more than originally intended, but not by design. It does all blend together and I was not trying to be esoteric. I guess the more I thought about it and posted, the more I realized that its not really about just getting a number but rather what to do with the number when you get it and how to finesse the situation to get an outcome satisfactory to everyone.

My only goal in life, Mike, is to reach 10K posts like you!

When that happens, my ability to stay on point will be much enhanced and my reticence to defend my positions will be vanquished. I recognize the salient point you are making about specific answers to specific questions but as my brain ages, what's left of it tends to drift.

mics_54 · 07-16-2009, 10:11 AM

I usually just ask.."what's your budget for the project?".

Mike Finley · 07-16-2009, 02:54 PM

Quote:

Originally Posted by silvertree

I have had people tell me cost is no concern, that's a big fat lie. Unless they won the lottery people with money have budgets because they understand how you get and keep money.
People who need to watch money are usually relieved to have some real figures to make an informed decision.
People looking for the cheapest price are hard to satisfy and have a lifetime of getting less than what they want. They may want a prize winning design, but they get junk because they paid for junk.

That' right.

There is certainly the case of people who have planned on doing a project and have never actually vocalized a dollar figure even to each other. They might cut stuff out of magazines, comment to each other on a tv show, hey, we should do that... they might have even picked out a few things, but still have never actually said - I think we should stay around $X.XX dollars on this project.

However, one of them maybe only individually has thought of a price range. And maybe only breifly in passing. But I guarantee you there is always a number in your head.

Nobody for example goes out to look at new cars and walks out the door thinking hmmmm.. I have no idea what price range I will end up, be it cash or monthly payments. Everybody has an idea.

It may not be the final price but they always have some starting point, and that's all this is about, getting that number vocalized. It has no bearing really on this point whether that number is way off base or a guess, that number is relevant to that person, even if at that moment is the very first time you have forced them to think about it and verbalize it.

rbsremodeling · 07-16-2009, 05:09 PM

I re-read this post and it has gotten some good responses.

I think for me the get the budget from the homeowner is not that important of an issue for me any more

I see budgets side stepped so often they have become almost useless as a gauge of what people want to or will actually spend.

I personally see it as putting a spending cap on cost that might not necessarily need to be there.

BreyerConstruct · 07-16-2009, 07:15 PM

Quote:

Originally Posted by rbsremodeling

I re-read this post and it has gotten some good responses.

I think for me the get the budget from the homeowner is not that important of an issue for me any more

I see budgets side stepped so often they have become almost useless as a gauge of what people want to or will actually spend.

I personally see it as putting a spending cap on cost that might not necessarily need to be there.

You work in a unique market- a location where it is more common to do this.

I've been asking for budgets- and been amazed at the responses. I now know what to design! Take yesterday:

Apt. #1. Young couple, smaller deck/patio area. Given room to design what I believe would fit well, I'd probably be putting a 5k base with 2-4k of options in front of them.
Turns outr they have a 3k preferred range... and feel that 6k is too much.
Guess what, I'll design SOMETHING to be UNDER 3k to start, and with options taking it to around 4k.

Apt. #2. Middle-aged couple, and the guy's an engineer. He has sketches, knows kinda what he wants. Because I'm a bit more open-minded in construction ideas than him, I was able to offer a few options he hadn't considered. Then I asked for the budget- he had hinted that he had one, but the project could have been a 25k to 50k project... and I wanted to see what his expectations were, so I knew what to put in front of him.
He'd like to be between 30k and 35k.
Guess what? I'll show an option that's UNDER $30k, and options that take it closer to 40k.

I expect to get both of these jobs. I understand their needs and wants, and I will put exactly what they are looking for in front of them. I've designed too many projects that people can't afford. Done with that! From now on I'll give them what they want- or price- but will offer options to take the project up to where it should be in features, detail, etc. based on my industry experience.
This way THEY can do the up-selling.

Prospect I met with tonight, I was under 20k for the basic deck, and right at 30k for the "full Monty". They want it all, and I know this is their budget range. Only bummer here is they want to get another price- but it's not really for the savings (we discussed how I build more decks than anyone local, and offer a higher quality- and the other folks they know have been happy, etc.) instead, they (well, he) feel a social responsibility to talk to this other guy who's not a deck builder.
This is where I start to be more like Mike (VA). I back off. I want them choosing me, and with little-to-no pressure. They way I have their full buy-in as we move forward. It makes for a happier project, a happier client, and lower risk of a client backing-out.

Rory, I disagree with you about the budget. You gotta know what they're thinking- and then let THEM do the up-selling to whatever their little hearts desire. A budget is just a starting point. Heck, I had a couple earlier this week who truly had no idea. They finally said they knew it would be more than a few k, but didn't want some 25k project (and this is what I would have been proposing!) so I said "ok, so between 2k and 25k? We can work with that". I'll show them a striped-down option that's basic and requires them to do some work for maybe 5-6k, and then "real" options up to around 20k.

OK, Matt the lousy typist is done! LOL
Great thread...

~Matt

BobsLandscaping · 07-16-2009, 07:26 PM

One thing to think about is financing. I offer financing through Deere, a quick phone call and I can get a preliminary credit limit for my client. If they want more then I can fax in proof of income and see how much credit Deere will extend them. This is a usefull tool.

For example they may want a moderate landscape for under $10K. However Deere will extend this client $25K in credit. In that instance I will design two projects, one for $10K and one for $25K w/ a lot more bells and whistles. Majority of the time they elect to max out.

Matt, I think Deere will finance decks and carries a lot of decking material. If you want some contact info let me know.