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What To Do When Your Client Has No Budget?

 
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Old 02-14-2020, 07:42 AM   #1
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What To Do When Your Client Has No Budget?


I know the majority of you will consult with your client during walkthrus, and the estimate process and the majority of you also generally say something along the lines of:

"Do you have a budget, or dollar figure for this project?"

I'm interested in what to do when my clients say "No" to the above question for a couple reasons;

1) We all know a lot of people have no idea what a project REALLY costs, verses the idea in their head

2) A project shouldn't fall through because a client doesn't know there may be inexpensive alternatives to some of the things they'd like to do.

I wrote a bathroom remodel estimate earlier this week and was put in this exact position of "Well no, I haven't put together a budget for this remodel...."
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Old 02-14-2020, 08:18 AM   #2
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Re: What To Do When Your Client Has No Budget?


I will usually throw out some ballpark construction figures and then some ballpark selection figures based on mid-range and high-end finishes and feel them out, before spending a lot of time putting together an estimate/proposal.

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Old 02-14-2020, 08:34 AM   #3
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Re: What To Do When Your Client Has No Budget?


It's more like they don't want to tell you their budget because then you will try to use it all up. But usually it's already insufficient to take care of the work they want. I've had people tell me that, they want my number first before they let the budget out of the bag.
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Old 02-14-2020, 08:49 AM   #4
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Re: What To Do When Your Client Has No Budget?


Quote:
Originally Posted by CharlieDelta View Post
I know the majority of you will consult with your client during walkthrus, and the estimate process and the majority of you also generally say something along the lines of:

"Do you have a budget, or dollar figure for this project?"

I'm interested in what to do when my clients say "No" to the above question for a couple reasons;

1) We all know a lot of people have no idea what a project REALLY costs, verses the idea in their head

2) A project shouldn't fall through because a client doesn't know there may be inexpensive alternatives to some of the things they'd like to do.

I wrote a bathroom remodel estimate earlier this week and was put in this exact position of "Well no, I haven't put together a budget for this remodel...."
It's hard to develop any estimate until you know what products they want to use, and how much they want to pay...

Some are in the tire kicking phase because they really have no idea of what it will cost and are gathering info, but in reality, the answer to "no" when asked about a budget is a way to keep what they WANT to spend close to the chest because they've been (legit or not) conditioned not to tell salespeople how much as they will willingly spend their dollars for them...

The way around this conundrum is getting an overall view of what they actually want done before even discussing pricing... if you've been doing it long enough, you should have a rough understanding of what things can cost, so after discussing their WANTS and NEEDS, zero more down into the "budget" by giving them ranges, that comes with different levels of quality...
"Ms. Customer, when it comes to bathrooms, it's similar to cars... there are new cars that do what you want them to do, but come in different levels of quality, from your basic model that meets your NEEDS to the ones with a few more options that scratch most of your NEEDS and WANTS, and then the luxury which along with the reputation and quality comes more cost. There are always way to save with alternative options... Bathrooms are similar... For those on strict budget, from $X to $X, this will get you what you need; a new bathroom that serves your needs... For those with a little room in the budget for many of the extra's which brings it to the next level and satisfies the NEEDS and WANTS of most of our customers, that range is from $X to $X... and then for those for whom money is not an issue, but want the best there is to offer, that ranges from $X on up... (now key question) Which range do you think your budget would fit most comfortably in?"...
And then let them tell you their budget range (which will most likely represent the money they have to use in cash/credit) and because they don't have to give you an exact figure because you're discussing a range they're more apt to be open to give it you... in MOST cases they're going to pick the middle range... because they didn't wait to do it only to be disappointed in cheaping out on the outcome with the basic option, but also don't want to spend the kids education fund to get there with the luxury option... instead of asking for a number that they can say no to, your giving them multiple options to choose from...

The key here is developing your pricing so that it can include some of the luxury items in the mid-range... and the way to know that is by being detailed in determining what they need AND want before developing the pricing... and then when you present your pricing, they'll be happy to find out that not only did you stay within the budget discussed (shoot for 10% below if possible and meets your business needs) but that the number includes some of the luxury options that they may not have been expecting...

But another key here is NEVER give a price drop UNLESS they give up something in return (alternative materials for example), otherwise they have no idea how deep the discount well goes if you choose to play salesman pricing games instead of tradesman who knows his worth...

Last edited by KAP; 02-14-2020 at 08:58 AM.
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Old 02-14-2020, 09:36 AM   #5
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Re: What To Do When Your Client Has No Budget?


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But another key here is NEVER give a price drop UNLESS they give up something in return (alternative materials for example), otherwise they have no idea how deep the discount well goes if you choose to play salesman pricing games instead of tradesman who knows his worth...
Holy smokes isn't this the truth. Prices changes when scope of work changes. I'll lower the price, when work is removed, or materials are changed. People really struggle to understand that concept it seems....
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Old 02-14-2020, 09:51 AM   #6
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Re: What To Do When Your Client Has No Budget?


You need a better understanding of the client themselves before discussing the project. What are they thinking about? Who's it for? Who wants it? How long? When did they start looking for contractors?

I just went through this with a former client. Their property manager/agent, who was now acting on their behalf (warning), assured me that owner wanted to upgrade their rental condo. counter tops, cabinet fronts, flooring, lighting...and would I get some pricing.

All I did was ballpark the items, in writing, to find out that it was a total waste of time. The guy wanted to spend $5k tops.

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Old 02-14-2020, 09:57 AM   #7
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Re: What To Do When Your Client Has No Budget?


Quote:
Originally Posted by NJ Contractor View Post
I will usually throw out some ballpark construction figures and then some ballpark selection figures based on mid-range and high-end finishes and feel them out, before spending a lot of time putting together an estimate/proposal.
Good strategy !
If they won't provide a budget, bounce some numbers off of them to see if they are anywhere in the ballpark before going ahead with a detailed estimate and proposal.
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Old 02-14-2020, 10:28 AM   #8
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Re: What To Do When Your Client Has No Budget?


31 years I've never asked about a budget. Most don't have a clue what a project cost if I were to ask they would scare me off before I scare them off.
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Old 02-14-2020, 10:40 AM   #9
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Re: What To Do When Your Client Has No Budget?


I don't think I've asked about budget hardly at all.

How things get handled in part depends on what you're doing. Roofing is a little different than an interior remodel.
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Old 02-14-2020, 01:43 PM   #10
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Re: What To Do When Your Client Has No Budget?


I asked once, they said what ever it costs to get what they want
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Old 02-14-2020, 06:01 PM   #11
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Re: What To Do When Your Client Has No Budget?


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I asked once, they said what ever it costs to get what they want
You really only need one of these projects. Do you have a projected finish decade?
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Old 02-14-2020, 07:38 PM   #12
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Re: What To Do When Your Client Has No Budget?


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You really only need one of these projects. Do you have a projected finish decade?
I did have one that went on for 3 years, they could not exactly decide on what they wanted. So it went off and on for 3 years, no way to estimate that. Finally finished and they moved, then I did more at that house.
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Old 02-15-2020, 09:53 AM   #13
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Re: What To Do When Your Client Has No Budget?


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Holy smokes isn't this the truth. Prices changes when scope of work changes. I'll lower the price, when work is removed, or materials are changed. People really struggle to understand that concept it seems....
Yeah, the way I make that point if they balk at giving something up to get it for less is to tell them straight up that everyone else that is going to involved in the project is going to expect to be paid, no matter what we agree to and so do I... as it should be... if I lower the price willy nilly, that should be your clue that there was buffer in there to begin with, an old sales gimmick, raise it to lower to give the appearance of a "discount"... I don't play salesman pricing games, you're getting what you're paying for, so because everyone else still expects to be paid, the only place any price drop can come out of is literally my families pocket (gets them thinking about their family circumstance) which I'm sure you wouldn't appreciate your boss asking you to do...

So PISS OFF! (OK, I don't say THAT because, well...)
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Old 02-15-2020, 09:59 AM   #14
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Re: What To Do When Your Client Has No Budget?


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Old 02-18-2020, 07:19 PM   #15
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Re: What To Do When Your Client Has No Budget?


Like NJ Contractor said, I’ll throw out a “ballpark” number based on similar projects that we’ve done. KAP’s dialog is really good.

I stopped using ranges some time ago. I would tell them “Based on what you’ve told me, your kitchen remodel will be in the $100,000 to $130,000 range depending on how extravagant you get with your selections.”

They would hear “Your kitchen remodel will cost $100,000 and you can have anything you want”.

No more ranges!
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Old 02-19-2020, 04:06 AM   #16
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Re: What To Do When Your Client Has No Budget?


That's the reason I stopped doing not to exceed pricing. I could expect it to be 15,000, but put a not to exceed price of 18,000 because of unknowns and they only see the high price and want it lower.

Might as well just go high and get it or don't get it.

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Old 02-19-2020, 06:42 AM   #17
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Re: What To Do When Your Client Has No Budget?


I never give guestimates either. Customers tend to hold that number in their head when given an actual estimate.
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Old 02-19-2020, 07:48 AM   #18
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Re: What To Do When Your Client Has No Budget?


I usually add a 15% contingency factor to my initial budget number. As others have mentioned, once you verbalize a cost you're stuck with it regardless of scope/finishes. Having that buffer allows for a better negotiation.

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Old 02-19-2020, 09:57 AM   #19
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Re: What To Do When Your Client Has No Budget?


Great information fellas!
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Old 03-04-2020, 12:42 AM   #20
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Re: What To Do When Your Client Has No Budget?


Almost 80pct of my calls are from referral, and when I come in to high, they go else where. Of those who go else where, about 60pct of those people ALWAYS come back with me having to fix the other cheaper guy's work.


I always end my meeting with client before emailing my proposal with this, "I am not the cheapest nor the most expensive guy, but I always pick up the phone. If if cheap is what you want, here is a number to "insert name of a cheaper guy here" and he may be able to help you.

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