IS IT A GOOD IDEA TO ASK ABOUT THE BUDGET?
Raise your hand if you’ve been trained to ask the buyer about the budget. I’m raising mine because I was trained that way.
Let’s think about this a little deeper.
We’ve all been taught to “qualify” the buyer. Right? One way to qualify if the buyer can purchase is to uncover their personal budget (if selling B2C) or the corporate budget. The question we’ve been all taught to ask is...
“Given what we’ve discussed, what budget possibilities do you have to do this?”
Typically you’ll get one or more answers like this..
- The budget is too low
- There’s not enough in the budget this year
- Another decision maker will need to be consulted
Rarely, do you hear that the buyer has more than enough in the budget to close the deal. Besides, would you disclose your budget to someone? I wouldn’t.
So why ask the pointless question?
The budget question sets you up for a war on price.
In essence you’re saying to the buyer…” you go first” when asking about their budget. You might as well say…” what can you afford?….You set the price”
This war on price puts you in a no win situation.
Adam Galinsky of The Columbia Business School, shows in his research that 85% of the time, final negotiated prices correlate more closely with who went first. So if your go first with a final higher priced offer, then the final price will result in being higher. However, if the buyer goes first and the offer is low, (which it always is) the final price is low.
So..what’s the answer?
When you get to the point where it’s time to talk about price, share a range of the cost that’s needed to move forward.
“Given what we’ve discussed, the ballpark to do this the way you want will be around $____ to $____ range.”
This is called investment norming. It’s a concept taught by Rain Group to qualify the buyer and set the price range “anchor”. “Anchor” meaning the price will not go above or below the price range given.
Once you’ve established a range, the buyer will come back with two type of responses…
“This is more than I anticipated but it is workable.”
“We’d never consider spending this much.”
If the answer you get is the latter, then you know this is not a qualified buyer so move on. Don’t go down the rabbit hole of negotiating price because you know who loses in that deal!
Whoever sets the expectation first is the one who will influence the final price. As a matter of fact this is true within the entire sales process. Be the one who influences and stays in control of the sales process.
Too many times salespeople cut off their nose to spite their face just to make a sale…especially when they need to make a sale. Not all prospects are the right prospects. There are too many possibilities out in your selling world who are the right prospects. Stop beating the dead horse and start beating the pavement uncovering the right prospects.
Never negotiate price. You can negotiate terms. You can add to or take away product and services in your offer...but the price is the price. Qualify the buyer by giving a ballpark range on price. Set the anchor.
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