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Getting Them To Cough Out A Budget....

 
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Old 07-18-2012, 09:44 AM   #1
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Getting Them To Cough Out A Budget....


Hey guys, I have been having some trouble lately and want to know how you guys get a potential client to vocalize a budget to you.

I recently submitted a quote for a patio, and apparently it was well above what they had in mind, when trying to explain that if they gave me a budget, I could adjust the scope of work to conform to it they basically walled up.

Then this week I have had numerous replies saying I was coming in too high, I can't sacrifice my profit margins, but I am willing to change the job to help them, but everyone must be thinking I am just trying to screw them over or something.
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Old 07-18-2012, 03:44 PM   #2
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Re: Getting Them To Cough Out A Budget....


I learned this from a local friend and find that it works very well to ball park them without them having to spill the beans.

We take a set of books to the first meet; "Interior Home Improvement Costs" from RS Means, subtitled "How Much Will Your Project Cost?". There's a second volume for exterior work. If I recall, they ran about $30 each.

These books are geared more towards the HO than the contractor and describe various common projects with a list of variables. There is a detailed costs section to build a project if you can't find a specific project to fit your need.

You simply review the given project with the client, make sure it contains the features they are looking for and adjust the pricing for your area from the chart in the back. Ask again to make sure you agree that this is the project they want.

Then our closing line is, "Well, this is what these guys say it will cost. Our experience has been that our actual quotes come in slightly higher. What do you think?"

Then shut up and watch their faces. You will know if you are in the same ballpark or not.

Hope that helps you.

Good Luck
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Old 07-18-2012, 04:23 PM   #3
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Re: Getting Them To Cough Out A Budget....


I will talk numbers on the phone call if I dont like what I am hearing, if and when I get to the house a rough budget will be decided upon or I wont give anything other than a ballpark number.

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Old 07-18-2012, 05:41 PM   #4
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Re: Getting Them To Cough Out A Budget....


I refuse to give ballparks to them at the first look because I like to come home and sit down and really break down what it is going to take to get the job done well and still make my profit.

In the past I ball parked it and then figured out I would need 20% more than I said when i wrote the estimate.

I wish I knew a better way to say "Well, about how much were you looking to spend on this project" not that I say that anyway. But I do like to have a rebuttal for them thinking the job costs too much, it isn't a huge compromise for either party to reduce the size of a job and make up the difference in material cost to bring down the price.
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Old 07-18-2012, 07:33 PM   #5
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Re: Getting Them To Cough Out A Budget....


I think you have most of the ingredients for this not to be problem already.

In the instance you mention of ballparking and being off by 20%, that sounds pretty freakin' close to me. It is a ballpark after all. If your ballpark figures are that close (but I suspect consistently under, there by seemingly causing friction in your opinion) then continue ballparking but before you say the number multiply by 50% (or some safe number) and give them a range, your ballpark on the bottom and your ballpark +50% on the top end. Then after you go home and do the detailed estimate you have beaten the high number by 30% and look honest.

Honestly, there doesn't need to be an easier way to ask what is your budget you may need to get more comfortable asking it though. One of my responses to how much will it cost for X is "it defends on what kind of X you want, your question is like asking how much will a new car cost."

Another alternative is to offer the costs (preferably mid-range to higher end) of similar type jobs you have done for others. This can establish a ballpark yet is unrelated to their specific project, and if they want economy grade results then you again beat expectation.

It seems to me when a client won't give simple info like what their budget is their is a trust issue with the contractor (or just period and maybe not a desirable client) so review how building that trust with folks has been working.

I work on the trust from the start because I am looking for long term clients so I always see time spent doing so as saving both time and headaches down the road.

I think some folks get more focused on the job or the sale. It seems to me if I focus on trust (relationship) then I have an easier time with the client and projects.
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Old 07-19-2012, 07:00 AM   #6
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Re: Getting Them To Cough Out A Budget....


Sometimes the best approach is to ask them................." Mr Chris, what do you have budgeted for this project ?" or "Mr Chris what is your target price ?"

Just trying to help
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Old 07-19-2012, 08:06 PM   #7
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Re: Getting Them To Cough Out A Budget....


I recently had this come up myself. Project was for a basic basement finish, I gave them a firm quote of roughly 50k(around 1800 sq ft). They said that was way over their budget. So I just came out and asked, they have a budget of $25k. After a few e mails back and forth I had to turn down the job. It turned into a "gut feeling" about the entire thing.
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Old 07-19-2012, 08:20 PM   #8
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Re: Getting Them To Cough Out A Budget....


I have never really had an issue getting people to verbalize a budget. The secret is to just ask, and then explain why it is important. Establishing a rough budget is typically done over the phone before we even meet as it is a pre qualifier for getting me to show up. Sales is all about communication, and I'm a wordsmith..

Just tell the people you need to know their rough budget so you dont waste a bunch of "their" time.
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Old 07-19-2012, 09:05 PM   #9
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Re: Getting Them To Cough Out A Budget....


This is my standard close. I have it memorized:

“This is a project that I am very interested in. But there are three laws I cannot break. The first, I cannot defy the law of gravity. Second, I cannot defy the building code laws. Now, it doesn’t appear you’re asking me to defy the first two laws, but the third law is - the law of the budget. What are you hoping to spend on this project? (long pause – no response). I can design the project with diamond studded toilet seats and mink lined sinks or I can try to design to you expectations. We’ll both be happier, if I design to your budget. This is important… What are you hoping to spend on this project?”

Then shut the F***-up. The next person to speak losses.
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Old 07-19-2012, 09:36 PM   #10
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Re: Getting Them To Cough Out A Budget....


Quote:
Originally Posted by DaVinciRemodel View Post
This is my standard close. I have it memorized:

“This is a project that I am very interested in. But there are three laws I cannot break. The first, I cannot defy the law of gravity. Second, I cannot defy the building code laws. Now, it doesn’t appear you’re asking me to defy the first two laws, but the third law is - the law of the budget. What are you hoping to spend on this project? (long pause – no response). I can design the project with diamond studded toilet seats and mink lined sinks or I can try to design to you expectations. We’ll both be happier, if I design to your budget. This is important… What are you hoping to spend on this project?”

Then shut the F***-up. The next person to speak losses.
I'm liking that one...IF I can spit it out, I'm using it!
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Old 07-19-2012, 10:23 PM   #11
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Re: Getting Them To Cough Out A Budget....


Quote:
Originally Posted by DavidC View Post
I learned this from a local friend and find that it works very well to ball park them without them having to spill the beans.

We take a set of books to the first meet; "Interior Home Improvement Costs" from RS Means, subtitled "How Much Will Your Project Cost?". There's a second volume for exterior work. If I recall, they ran about $30 each.

These books are geared more towards the HO than the contractor and describe various common projects with a list of variables. There is a detailed costs section to build a project if you can't find a specific project to fit your need.

You simply review the given project with the client, make sure it contains the features they are looking for and adjust the pricing for your area from the chart in the back. Ask again to make sure you agree that this is the project they want.

Then our closing line is, "Well, this is what these guys say it will cost. Our experience has been that our actual quotes come in slightly higher. What do you think?"

Then shut up and watch their faces. You will know if you are in the same ballpark or not.

Hope that helps you.

Good Luck
Dave
Third-party material is powerful in this context... it also drives home the correct expectations...
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Old 07-20-2012, 08:25 AM   #12
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Re: Getting Them To Cough Out A Budget....


I agree, third party materials that gives information about costs are useful both for the client and for the trader when preparing a quote. The problem with some customers is that they are not open to negotiation and if the first quote you give is too high for them they just don't want to discuss it any more. I have similar experiences, it is very annoying and leaves you asking yourself so many questions.
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Old 07-23-2012, 11:44 PM   #13
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Re: Getting Them To Cough Out A Budget....


"If you give me an idea what we're working with, I can do my best to find a way to meet your expectations." usually works better than "What part do you want me to leave out of the job?". Being sincere, and comfortable dealing with clients helps too. If you're apprehensive or cagy for any reason, the clients spidey senses will pick it out and they will be suspicious and apprehensive.

Third party references are ok for things that can be priced per unit and don't have too many options, but they aren't always applicable. A bathroom remodel for example: Are you going to be jackhammering up 4" of concrete and metal lath under tile, or peeling up sheet vinyl? Are you installing a $100 cabinet with bargain basement fixtures, or custom built teak cab with cast bronze vessel sink?

I've seen a bathroom cabinet alone go for more than another complete bath remodel in a similar size bathroom. Like Davinci said - diamond studded toilet seat with mink lined sink and solid gold faucets anyone? I've seen kitchens in one house that cost more than another whole house of similar size ...

I can see using them if you're selling standard architectural shingles, installing hardwood floors, pouring foundations, or doing electrical wiring - but I don't see how they work when options range from $25 - $1000+ just for a faucet, and you can spend $1/sf or $250+/sf or anywhere in between on tile.
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Old 07-24-2012, 06:52 AM   #14
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Re: Getting Them To Cough Out A Budget....


In most cases the budget is not a realistic number, and budget is never accurately expressed, for many different reasons.

As a HO goes, most have no clue and try to get best lower number out there, and in most cases they already have a few estimates and each time the budget amount, is the last given estimate and this is how most people trying to low ball estimates.
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Old 07-24-2012, 07:48 AM   #15
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Re: Getting Them To Cough Out A Budget....


Quote:
Originally Posted by smalpierre View Post

Third party references are ok for things that can be priced per unit and don't have too many options, but they aren't always applicable. A bathroom remodel for example: Are you going to be jackhammering up 4" of concrete and metal lath under tile, or peeling up sheet vinyl? Are you installing a $100 cabinet with bargain basement fixtures, or custom built teak cab with cast bronze vessel sink?


I can see using them if you're selling standard architectural shingles, installing hardwood floors, pouring foundations, or doing electrical wiring - but I don't see how they work when options range from $25 - $1000+ just for a faucet, and you can spend $1/sf or $250+/sf or anywhere in between on tile.
We use them a lot for kitchens and baths, where there are a lot of variables. The books we use cover a number of them and your conversation with the prospect should mention others that you may see in your discovery process.

One thing that I like about this process is that it makes you and the HO members of the same team. If they have already received other quotes the "expert opinion" of the written word may bring home some reality. I've heard prospects state to their spouse, I wonder what the other guy is leaving out, for example.

If you're the first one in, then let the book deliver the first price. That's a position I seldom like.

But the real gold for me is when my prospect realizes that their budget is too small. I have saved so much time by not quoting a total job that really has a materials budget and no one is going to do it anyway.

Good Luck
Dave
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Old 07-24-2012, 08:48 AM   #16
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Re: Getting Them To Cough Out A Budget....


Quote:
Originally Posted by DavidC View Post
We use them a lot for kitchens and baths, where there are a lot of variables. The books we use cover a number of them and your conversation with the prospect should mention others that you may see in your discovery process.

One thing that I like about this process is that it makes you and the HO members of the same team. If they have already received other quotes the "expert opinion" of the written word may bring home some reality. I've heard prospects state to their spouse, I wonder what the other guy is leaving out, for example.

If you're the first one in, then let the book deliver the first price. That's a position I seldom like.

But the real gold for me is when my prospect realizes that their budget is too small. I have saved so much time by not quoting a total job that really has a materials budget and no one is going to do it anyway.

Good Luck
Dave
I'll have to get one of the books and see how they address that situation. I can't stand jobs where their budget is unrealistic and they don't ever get done. I guess it's not their fault for not knowing how much something will cost, and those HGTV shows can give them some unrealistic impressions.
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Old 07-24-2012, 09:51 AM   #17
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Re: Getting Them To Cough Out A Budget....


Have any of you guys ever considered sending unrealistic prospects to Remodeling Magazine’s “Cost vs. Value” report for a reality check?
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Old 07-24-2012, 04:41 PM   #18
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Re: Getting Them To Cough Out A Budget....


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Originally Posted by DaVinciRemodel View Post
Have any of you guys ever considered sending unrealistic prospects to Remodeling Magazine’s “Cost vs. Value” report for a reality check?
I've been receiving the free mag for a few months now, but I hadn't seen that report. Thanks for the tip!
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Old 07-24-2012, 05:45 PM   #19
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Re: Getting Them To Cough Out A Budget....


Paul I used that report for a while a couple years back, was great for those who were generally interested in quality but most of the leads I was seeing back then weren't interested in quality just who had the lowest numbers.

I suggest everyone at least at the numbers and have the website handy, it has swayed a couple people my way.
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Old 07-24-2012, 11:07 PM   #20
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Re: Getting Them To Cough Out A Budget....


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Originally Posted by DaVinciRemodel View Post
Have any of you guys ever considered sending unrealistic prospects to Remodeling Magazine’s “Cost vs. Value” report for a reality check?
I've never considered it for an unrealistic prospect, but have considered it for other purposes. Great idea!

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