6 Reasons You Should Answer the “What’s Your Budget?” Question

“What’s Your Budget?”

Do cringe every time you hear that?

When a sales rep asks, your first instinct might be to clam up. Mine is.

As a former CMO, I spent millions on marketing vendors and technology projects over the years. I was frequently in the buyer’s seat and I know how it feels to suspect that somebody is just trying to get as much money from you as possible.

It’s a bit like walking into a car dealership and having the salesperson inquire, “So, how much do you want to pay each month?”

When you’re buying services for your business, the budget issue is not about payments, it’s about value. Will you get what you need and realize a return on that investment?

Money is a resource, and there’s usually more to be found when something is a priority. There’s almost always an opportunity to pull funds from other areas to make an important project happen.

If you know you can find the money for whatever initiative you’re considering, you may be convinced that there’s no point in sharing your budget numbers with the person sitting in front of you.

What’s in it for you, other than a higher price tag?

Actually, there’s a lot at stake and it’s worthwhile to be frank. Here are six strong reasons to answer the all-important budget question:

1. It proves you’ve done your homework.

Having a budget number, or at least a range in mind, shows that you have some idea of what you’re looking for and how much it should cost.

This is a great way to very quickly demonstrate that you’re a savvy buyer, and you won’t be hoodwinked.

2. It shows you’re serious.

Tire kickers typically don’t have a budget because they’re fishing for numbers. If you’re using the salesperson’s time to help you do your research that’s okay, but be upfront about it.

When you’re open, the person you’re dealing with is much more likely to be helpful and honest in return.

3. It signals trust.

Saying “I don’t have a budget” is essentially telling someone, “I don’t trust you.” Lying about your budget in the first meeting is a bad sign. It doesn’t bode well for the prospect of a trusting partnership with the provider you’re considering.

Go ahead and share your budget estimate, even if it’s a broad range. Cite a high- and low-end, or give a more specific figure if you’re comfortable doing so.

If your budget depends on a variety of factors, be open about that. What considerations will impact how much you can spend?

4. It establishes your authority.

Real decision-makers don’t waste time shopping for services they can’t afford. They do their research and have a realistic budget in mind from the start.

Not knowing that number (or professing not to know) suggests that you’re simply gathering information for someone else. If you don’t want the person you’re dealing with to go over your head looking for the true buyer, be candid about the budget you have to work with.

What if you are doing legwork for someone higher up? Say so. There’s nothing wrong with exploratory meetings, and your potential partners will appreciate knowing where they are in the process.

5. It shows respect.

Helping the person that you’re dealing with figure out quickly whether you’re a good prospect is beneficial for you both. Being cagey shows you don’t respect their time.

Don’t waste your time or theirs dancing around the budget issue. Get a financial framework on the table and move on. If you are considerate of potential partners and things don’t work out, you may still find an ally or an opportunity to work together in the future.

6. It weeds out unqualified vendors.

Purchasing is a mutual decision. During the sales process, both parties should be evaluating fit as well as value.

If the relationship is not going to work because your budget expectations don’t align with their pricing structure, you want to know that as quickly as possible.

Now that you’re in the know, what will you do the next time you’re asked, “What’s your budget?”

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