Asking For A Budget

Fuzzycram · 01-25-2007, 10:19 AM

I just wanted to know from anyone's perspective:
Is it ethical and/or reasonable or a common practice when you're giving a quote to ask the HO what their budget is? I've never asked yet, but I've had a couple people tell me on their own and it surely helped pricing everything.

Dustball · 01-25-2007, 11:22 AM

The problem from a homeowner's perspective is that if they give you a budget that is higher than what you would've charged, they would think that you would adjust your rates higher to match their budget instead of your usual rates.

dougchips · 01-25-2007, 11:41 AM

If you build enough trust they will answer your question. On a good day, I can get their budget and their other bids before I hand them a proposal. At that point I know that I have their trust and more than likely the job.

Glasshousebltr · 01-25-2007, 12:04 PM

Doug's right ...it's a good trust test.

If I feel like the cats in the bag I'll drop the question like "Did you have a budget in mind for the project?"

Bob

Fuzzycram · 01-25-2007, 12:54 PM

Alrite, so I need to feel out the customer. I have another question too. I am partners with a guy and he gets uncomfortable when people want materials with their estimate. He says its a liability issue, and we compromised and said if they want materials with the estimate that they would have to pay 100% of the materials and 25% of the labor up front. He is living with it, but can anyone explain to me why that might not be such a good idea?

dougchips · 01-25-2007, 01:42 PM

Quote:

Originally Posted by Fuzzycram

Alrite, so I need to feel out the customer. I have another question too. I am partners with a guy and he gets uncomfortable when people want materials with their estimate. He says its a liability issue, and we compromised and said if they want materials with the estimate that they would have to pay 100% of the materials and 25% of the labor up front. He is living with it, but can anyone explain to me why that might not be such a good idea?

Your estimate already includes materials. My customer, your total project price that includes; labor, materials, all taxes, permit fees and disposal fees is $12,276.44, we take checks, credit cards and offer a fianance program that would make your monthly payments $210.35, which method would you like to go with (today).

The material specs should be included in your proposal, no need at all to give them a material price.

**Ed the Roofer** · 01-25-2007, 04:45 PM

Of course its ethical. You just have to establish what the HO is envisioning for the scope of work for his/her desired budget. They may be gun shy at first, but that is why you have to develop the trust factor and not the killer salesmann factor. Explain why it is necessary to know what financial parameters you need to be deaking with. What if they make changes to the scope, can they absorb that without going broke. Can you alleviate that concern for them by offering either such a detailed and comprehensive scope of work, that it would be unlikely they encounter any such charges. When you prepare your project specification consultation for them, you want to know in advance on which 3 of the good, better, best product offerings you would like to incorporate into your submittal.

Now, if they already have other quotes, and did not sign with anyone, they did not receive the trust or value from the other candidates yet. That is why you are there. Ask them how much they anticipate so and so would cost, and let them know if that is realistic. Just break out one small portion as a comparison to see where there mindset is at. What if you were able to provide additional value to their chosen product. Would they consider that as an option?

You see, at that point, they are not associating the price as much, but now are considering the added value to their home enhancement. Show them that the wiser more prudent choice would be to select the product that has the highest comparible ROI. This enhancement is not just a purchase that they receive the day it is provided and installed. It is one that may last years and years down the road. It has a recoverable value if it is chisen wisely.

Ed

Mike Finley · 01-25-2007, 05:18 PM

I almost always ask them if they have thought about a budget. I'm continuosly closing jobs that the final contracted price and the budget they told me about have nothing in common. I don't pre-qualify with the budget question, just get it out there to see what they are thinking and more importantly how they think about things.

Some people have lots of experience hiring others to do work and have an idea of what things cost, others, especially young people don't have any idea, they might have gotten their information from a book, a magazine article, a friend a relative, who knows, almost always it's wrong. I've had people do $15,000 remodels who started out thinking $6000 and had people do $15,000 remodels who stared out thinking $25,000.

If there budget is way over the top I'll tell them that they probably don't have to spend that much to do what they have told me they want to do. If there budget is way under what I am thinking is realistic, I tell them that too, usually just a "you're probably not going to be able to do what you are telling me for anywhere near that, you're probably off by 1/2 or something like that."

Usually the response is a very quick reply with a bit of embarassment on their part and something along the lines, of I have no idea what this stuff costs...

**Ed the Roofer** · 01-25-2007, 05:29 PM

I agree with Mike.

Once this potential admission on their part comes about, as long as I didn't make them seem foolish, the opportunity arrises to step forward and act as their personal renovation/remodeling consultant. Once that occurs, the trust has developed.

The job is already sold now. You can only lose it if you fail to do your proper follow throughs. That includes, signing the enhancement agreement(contract). I always try to come up with new phrases to call a contract.

Ed

Mike Finley · 01-25-2007, 05:53 PM

There is a lot of truth to that Ed.

One thing I have started doing and it might work for others if you are doing a consultative sales process is I have started using the word "budget" when referring to the job costs.

As in : "Okay, now that we have finalized your design I will put together the figures for your budget to accomplish what you want to do."

or, "Let's get together on Tuesday and we can go over the details and take a look at the budget to do what you want to do.

It's a simple change of words, budget for estimate, but it seems to be a powerful one. Estimate means what I want to charge them to do the job and budget seems to mean it's what they want to spend to do what they want to do.

Does that make sense? It sounds weird when I read it, but it sure does seem to be effective, people seem to take ownership of the numbers I give them and it changes everything around, now it's their numbers that they created from the work they want done. It's not a number that I came up with, it's almost like the work has created the numbers and that's what they are.

Murphy · 01-25-2007, 07:50 PM

I have just decided that the budget question will definitely come up everytime homeowners start rambling on and on about what they want. This here this there.
I just spent about 10 hours between meeting with plumber and finding the specific glass she was asking for the shower to price out I get done bath runs in the 18's the home owner decides to move instead.
Save yourself some time and ask the budget question. You want a bath for 10 I can do that you want a 20 bath I can do that but tell me what you want before I waste my time.
Just my humble continuously learning the hard way opinion.
Murph

Fuzzycram · 01-26-2007, 08:47 PM

I surely do thank you guys for your time and knowledge. I am feel like i am constantly battling with myself, because its like.. I spend a couple of hours with my partner on a big remodel that includes almost the whole house, and when we're done we look at each other and smile and are like.. man that's a great price for what they want. We're generally happy to be able to KNOW that we do really good work for a VERY decent price and then you relay the number to the customer and they act like you're trying to knock their head clean off their shoulders! The only gratifying thing about that is when they call you back a week later and are like well.. where do we sign and when do we get started? So okay. I can ask for a budget and not seam like a weasel. I do my best to sell value to the customer, and I'm sure I'll get better over time. Heres another question. We get a lot of requests for estimates off the internet, because we have so far put all our advertisting cash into the net(which is great! if you haven't invested in the yellowpages.com, yer missin out). A lot of them after you talk to them face to face just want you to shoot a number at them through an e-mail. I personally like to talk to them so they can hear my voice inflections and really get a feel for what they're getting. Do you think it's just the same to e-mail a quote, or is there a good way to make sure they all hear my voice or we meet face to face again to discuss them?

**Ed the Roofer** · 01-26-2007, 10:54 PM

Fuzzy,

If you would like comments directed towards a specific new question, please start a new topic thread. Otherwise the Q & A will get all jumbled up in this threads continuity.

Respectfully,

Ed

01-25-2007, 10:19 AM	#1
Fuzzycram View Profile Fuzzycram Member Send Message Follow Blogs (0) Threads (36) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Member Trade: Carpentry, Framing & Remodeling Join Date: Dec 2006 Location: Jacksonville Florida Posts: 36	Asking For A Budget I just wanted to know from anyone's perspective: Is it ethical and/or reasonable or a common practice when you're giving a quote to ask the HO what their budget is? I've never asked yet, but I've had a couple people tell me on their own and it surely helped pricing everything. __________________ Quality over Quantity

01-25-2007, 11:22 AM	#2
Dustball View Profile Dustball Pro Send Message Follow Blogs (0) Threads (756) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Pro Trade: Project Manager/Licensed Remodeler Join Date: Jul 2006 Location: St. Paul, MN Posts: 756	Re: Asking For A Budget The problem from a homeowner's perspective is that if they give you a budget that is higher than what you would've charged, they would think that you would adjust your rates higher to match their budget instead of your usual rates.

01-25-2007, 11:41 AM	#3
dougchips View Profile dougchips Insert title Send Message Follow Blogs (0) Threads (4,677) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Insert title Trade: Doors-Windows-Decks Join Date: Apr 2006 Location: MA&RI Posts: 4,677	Re: Asking For A Budget If you build enough trust they will answer your question. On a good day, I can get their budget and their other bids before I hand them a proposal. At that point I know that I have their trust and more than likely the job.

01-25-2007, 12:04 PM	#4
Glasshousebltr View Profile Glasshousebltr Custom Builder Send Message Follow Blogs (0) Threads (4,403) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Custom Builder Trade: From dirt to ridge vent Join Date: Feb 2004 Location: South Central Illinois Posts: 4,403	Re: Asking For A Budget Doug's right ...it's a good trust test. If I feel like the cats in the bag I'll drop the question like "Did you have a budget in mind for the project?" Bob __________________ Bob

01-25-2007, 12:54 PM	#5
Fuzzycram View Profile Fuzzycram Member Send Message Follow Blogs (0) Threads (36) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Member Trade: Carpentry, Framing & Remodeling Join Date: Dec 2006 Location: Jacksonville Florida Posts: 36	Re: Asking For A Budget Alrite, so I need to feel out the customer. I have another question too. I am partners with a guy and he gets uncomfortable when people want materials with their estimate. He says its a liability issue, and we compromised and said if they want materials with the estimate that they would have to pay 100% of the materials and 25% of the labor up front. He is living with it, but can anyone explain to me why that might not be such a good idea? __________________ Quality over Quantity

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01-25-2007, 04:45 PM	#7
Ed the Roofer View Profile Ed the Roofer Pro Send Message Follow Blogs (0) Threads (7,135) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Pro Trade: Roofing Contractor Join Date: Dec 2006 Location: NW Suburbs of Chicago Posts: 7,135	Re: Asking For A Budget Of course its ethical. You just have to establish what the HO is envisioning for the scope of work for his/her desired budget. They may be gun shy at first, but that is why you have to develop the trust factor and not the killer salesmann factor. Explain why it is necessary to know what financial parameters you need to be deaking with. What if they make changes to the scope, can they absorb that without going broke. Can you alleviate that concern for them by offering either such a detailed and comprehensive scope of work, that it would be unlikely they encounter any such charges. When you prepare your project specification consultation for them, you want to know in advance on which 3 of the good, better, best product offerings you would like to incorporate into your submittal. Now, if they already have other quotes, and did not sign with anyone, they did not receive the trust or value from the other candidates yet. That is why you are there. Ask them how much they anticipate so and so would cost, and let them know if that is realistic. Just break out one small portion as a comparison to see where there mindset is at. What if you were able to provide additional value to their chosen product. Would they consider that as an option? You see, at that point, they are not associating the price as much, but now are considering the added value to their home enhancement. Show them that the wiser more prudent choice would be to select the product that has the highest comparible ROI. This enhancement is not just a purchase that they receive the day it is provided and installed. It is one that may last years and years down the road. It has a recoverable value if it is chisen wisely. Ed

01-25-2007, 05:18 PM	#8
Mike Finley View Profile Mike Finley Chief Toilet Mover Send Message Follow Blogs (0) Threads (14,078) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Chief Toilet Mover Trade: Bathroom Remodeling Join Date: Apr 2004 Location: Littleton, Colorado Posts: 14,078	Re: Asking For A Budget I almost always ask them if they have thought about a budget. I'm continuosly closing jobs that the final contracted price and the budget they told me about have nothing in common. I don't pre-qualify with the budget question, just get it out there to see what they are thinking and more importantly how they think about things. Some people have lots of experience hiring others to do work and have an idea of what things cost, others, especially young people don't have any idea, they might have gotten their information from a book, a magazine article, a friend a relative, who knows, almost always it's wrong. I've had people do $15,000 remodels who started out thinking $6000 and had people do $15,000 remodels who stared out thinking $25,000. If there budget is way over the top I'll tell them that they probably don't have to spend that much to do what they have told me they want to do. If there budget is way under what I am thinking is realistic, I tell them that too, usually just a "you're probably not going to be able to do what you are telling me for anywhere near that, you're probably off by 1/2 or something like that." Usually the response is a very quick reply with a bit of embarassment on their part and something along the lines, of I have no idea what this stuff costs...

01-25-2007, 05:29 PM	#9
Ed the Roofer View Profile Ed the Roofer Pro Send Message Follow Blogs (0) Threads (7,135) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Pro Trade: Roofing Contractor Join Date: Dec 2006 Location: NW Suburbs of Chicago Posts: 7,135	Re: Asking For A Budget I agree with Mike. Once this potential admission on their part comes about, as long as I didn't make them seem foolish, the opportunity arrises to step forward and act as their personal renovation/remodeling consultant. Once that occurs, the trust has developed. The job is already sold now. You can only lose it if you fail to do your proper follow throughs. That includes, signing the enhancement agreement(contract). I always try to come up with new phrases to call a contract. Ed

01-25-2007, 05:53 PM	#10
Mike Finley View Profile Mike Finley Chief Toilet Mover Send Message Follow Blogs (0) Threads (14,078) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Chief Toilet Mover Trade: Bathroom Remodeling Join Date: Apr 2004 Location: Littleton, Colorado Posts: 14,078	Re: Asking For A Budget There is a lot of truth to that Ed. One thing I have started doing and it might work for others if you are doing a consultative sales process is I have started using the word "budget" when referring to the job costs. As in : "Okay, now that we have finalized your design I will put together the figures for your budget to accomplish what you want to do." or, "Let's get together on Tuesday and we can go over the details and take a look at the budget to do what you want to do. It's a simple change of words, budget for estimate, but it seems to be a powerful one. Estimate means what I want to charge them to do the job and budget seems to mean it's what they want to spend to do what they want to do. Does that make sense? It sounds weird when I read it, but it sure does seem to be effective, people seem to take ownership of the numbers I give them and it changes everything around, now it's their numbers that they created from the work they want done. It's not a number that I came up with, it's almost like the work has created the numbers and that's what they are.

01-25-2007, 07:50 PM	#11
Murphy View Profile Murphy Student of Life Send Message Follow Blogs (0) Threads (208) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Student of Life Trade: Remodeling, Restoration, and Repair Join Date: Mar 2006 Location: Midlothian VA Posts: 208	Re: Asking For A Budget I have just decided that the budget question will definitely come up everytime homeowners start rambling on and on about what they want. This here this there. I just spent about 10 hours between meeting with plumber and finding the specific glass she was asking for the shower to price out I get done bath runs in the 18's the home owner decides to move instead. Save yourself some time and ask the budget question. You want a bath for 10 I can do that you want a 20 bath I can do that but tell me what you want before I waste my time. Just my humble continuously learning the hard way opinion. Murph

01-26-2007, 08:47 PM	#12
Fuzzycram View Profile Fuzzycram Member Send Message Follow Blogs (0) Threads (36) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Member Trade: Carpentry, Framing & Remodeling Join Date: Dec 2006 Location: Jacksonville Florida Posts: 36	Re: Asking For A Budget I surely do thank you guys for your time and knowledge. I am feel like i am constantly battling with myself, because its like.. I spend a couple of hours with my partner on a big remodel that includes almost the whole house, and when we're done we look at each other and smile and are like.. man that's a great price for what they want. We're generally happy to be able to KNOW that we do really good work for a VERY decent price and then you relay the number to the customer and they act like you're trying to knock their head clean off their shoulders! The only gratifying thing about that is when they call you back a week later and are like well.. where do we sign and when do we get started? So okay. I can ask for a budget and not seam like a weasel. I do my best to sell value to the customer, and I'm sure I'll get better over time. Heres another question. We get a lot of requests for estimates off the internet, because we have so far put all our advertisting cash into the net(which is great! if you haven't invested in the yellowpages.com, yer missin out). A lot of them after you talk to them face to face just want you to shoot a number at them through an e-mail. I personally like to talk to them so they can hear my voice inflections and really get a feel for what they're getting. Do you think it's just the same to e-mail a quote, or is there a good way to make sure they all hear my voice or we meet face to face again to discuss them? __________________ Quality over Quantity

01-26-2007, 10:54 PM	#13
Ed the Roofer View Profile Ed the Roofer Pro Send Message Follow Blogs (0) Threads (7,135) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Pro Trade: Roofing Contractor Join Date: Dec 2006 Location: NW Suburbs of Chicago Posts: 7,135	Re: Asking For A Budget Fuzzy, If you would like comments directed towards a specific new question, please start a new topic thread. Otherwise the Q & A will get all jumbled up in this threads continuity. Respectfully, Ed

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