"You're Not In Our Budget"

September 20. 2009

Q: More than once this year I have heard, “….I’m sorry, we just don’t have the budget to fund this project right now.” We are a service organization and after working diligently understanding their needs and defining a proposal, these kind of turn downs dig right into the inner soul. Do you have any thoughts on this subject? (Charlie M., CPA Firm, Columbia, SC)

A: The budget closing objection is similar to several others, including the implicit objection that your price is too high for the work or value proposed. It is about perceived value. This can result from not talking to the person who will benefit directly from your product or service, thus a lower perceived value than you want.
Second, you may be facing a competitive pressure from other vendors of services, even attorneys, accountants and engineers, all of whom may be facing market pressures to lower their fees. Third, this may just be a negotiation technique to see how much money the client can save (we are not the only ones who use "closing techniques").

Assuming you are talking to the qualified buyer and the one whose problem you are solving, it is critical to find out how much your services are worth to the client. One way is to not beat around the bush and just ask, "I understand you are cutting back on many investments, so tell me how much budget is available to improve sales efficiency by 20% (or whatever you are proposing)?" If the answer is "none" then your conversation under these terms is pretty much over.
Another service, another outcome or another buyer is called for. If they say "around $40,000," then you can, without cutting your daily fee if you are charging on a time and materials basis, start the discussion about trimming services to available budget. You should always be prepared with alternative formulations of your project (e.g., what could you do for 25%, 75% and 150% of your proposed fee).

Tip: Budget objections are always tied to value. If your client was sued, they wouldn't say, "We just don't have the budget to defend ourselves," or if there was an office flood, they wouldn't say, "We can't afford to clean up the damage." Your services just need to be altered to find that value.
This begins week four of September 2009. Have you prepared for the defined dash to the finish line? Have a great week and call or write if you need me and I will respond immediately!

George F. Mancuso, CPC
Gman Business Resources, Inc.
Grinnell, Iowa