Talking Dollars with Sales Prospects

      Finding out what a customer really wants, and what they really can afford, involves some psychology but the effort can pay off. December 9, 2013

Question
(WOODWEB Member):
In over 30 years I never asked a client what their budget for a project is, but it does make sense to know the amount so we can design to that. Recently a potential client contacted me about a project. Immediately, budget constraints came up. I sent a few pictures of similar projects, and they liked what they saw. I was only given a verbal description of the job and room it goes in with no dimensions. I was asked to submit my pricing for their review; I told them I needed more info to give a real price.

I realized how important the budget was to the clients and they wanted me to meet at the site to go over what they want. There is no plan, no layout, no appliance schedule at this point, so I asked what the budget for this part of the job is, to design with the budget in mind. I got no answer so I would bet there is no dollar amount, they just want to spend as little as possible. I guess trying to stay within an invisible and hidden budget is tricky. In retrospect, this was not my customer.

What do you all do about that age old budget question?

Forum Responses
(Business and Management Forum)
From contributor R:
Why would anyone give you a budget number if you aren't willing to give them a cost number? It's really not that hard to put down some basic pricing structure that says this is what our cabinets cost, with this upgrade costing this. Will it cover everything? No, but it will give you the advantage of having your customers feel you are being as above the board as you are asking them to be. Break it down however you price your cabinets. It tells them if you do this the cost will be this, you do that your cost will be that. Puts the customer at ease.



From the original questioner:
Once you know what they want and how much of it, I agree, but to throw a number - say square foot or lin foot - out there and say it will run from $150-250 per, depending on what you want, would not give them the price, since they have no idea how many feet there are or how we calculate them. They wanted me to do this without ever knowing the scope of the job to determine if it fits the budget. They wanted a price.


From contributor E:
I'm going to guess this is a kitchen project in which case I'd disagree with contributor R - you're not going to have option A and B if you're doing custom work. I've done kitchens from as little as $12k through almost $50k and everywhere between. You have to know what you're building to give a price and there's no sense in wasting time bidding a kitchen with inset doors and beaded face frames if the client is on a Euro cab budget. Now add in the fact that they had no plan or dimensions to go on and I don't see how you're even going to ballpark a price.

I don't have a good answer for this question. I've been tiptoeing around this problem for a bit over ten years now and am still uncomfortable asking about budgets. I think one thing that has helped me is most of my work comes from word of mouth, so they usually have some concept of what custom work costs in relation to off-the-shelf. Even still, I lose jobs because I'm too expensive for some. But from what I've read here over the years, that seems to be the norm.



From contributor R:
You hand them a sheet if need be (I've done this) with your pricing schedule on it. Mine is by the box - so much for an upper, base, tall with an upgrade price per box for each thing. Furniture grade, end panels, crown, soft close, etc. I actually put it on my website - transparency. We aren't running a secret society, but a business where all costs are known. And then you look them in the eye and say, "it's impossible to give you a price without knowing the size or details, but here is my pricing. If you can tell me your budget and we can go measure your kitchen, I can design a kitchen to meet your needs."


From contributor D:
I am not sure what kind of work the questioner is looking at (or not, as the case may be). I run into this all the time. I trot out a photo or two and a price for what is seen in the photo and what is included and excluded, or perhaps a verbal explanation and the cost. This will separate out the shoppers from the buyers pretty quick. Sometimes they will ask if changing the wood will reduce the cost by 50% or so. Of course it won't, so that will then send them on their way. I have not alienated them, but they decide that they cannot afford what I do - I don't have to tell them that.

The problem is that no one knows what this stuff - custom woodwork - costs; or even if they need it.

If the customer is still in front of me, I will offer to spec the job and do a quick design or use an existing one and quote a price - and establish a budget. This way it is to my apples and someone else's oranges, and I have shown ability and willingness to help them construct a budget.



From contributor A:
You give them a ROM (range of magnitude). We can get you a basic design for 12500, we can upgrade that with A, B and C to 18,000. If we add this, that, and the other thing it will be about 24,000. If we go with curved and elliptical this and that, it will be about 35000. What items would you like me to include for your prices? If you want we can design to your budget based on this criteria. We won't go over X if you do Y.

If you are fair and honest with them there is an opportunity to become a partner where you provide product at a cost that is designed to meet their budget.



From contributor G:
Some people want Champaign at Ripple pricing. I quote based on the same formula every time. If the designer asks to value engineer to meet a budget, I ask what the furniture budget is and they usually tell me. If I can do it within budget I do everything I can to get my pricing down. If I can't make a decent profit on the job I just tell them. We don't want a job that is breakeven to pay the bills. I have had a few buy cheap furniture from China or a local cabinet guy that thinks he can make a good chair. They have learned the hard lessons from that and are all back. Sometimes I will do a few pieces at cost to get the majority at a good margin and that works.


From contributor X:
Quality at a price you can afford! Different levels of pricing for different types of construction. Same goes for material. Apples versus oranges. Walnut versus paint grade pine. Production run vs custom run. Time and material versus what you can afford. Knowing what their budget is and viewing their lifestyle gives you a ballpark estimate of what you will suggest and make for them.

Quality at a price you can afford should leave you with three different prices to give your customer. High, medium and low. You sell what type of woodworking you want to build, plenty of choices.



From contributor M:
I read this as, they've had others prices and didn't like them. If you've already sent a few pictures of similar projects, tell them what those jobs went for and what bells and whistles were involved. If they balk, tell them what you can take out/change/downgrade.

At that point they'll show their cards - "shop X said it would be $" or "but we only want to spend $". Remember they don't want a Kitchen or A/V center, they want a lifestyle. Marketing 101 - you don't buy sandpaper because you want sandpaper, you buy sandpaper because you want smooth wood.



From the original questioner:
Yes , the job in question was a small kitchen. I have never asked for the budget amount. I bid each job as I see it, not based on any other pricing but my own. I also use a simple formula so my prices are always consistent. I add for upgrades and door styles and species and finish and such.

Even if I listed my formula with prices attached, it would not give these folks a price for the job in question - it would only show what we have charged for other jobs. It may make sense to us, but the clients have no clue what is what and still would want an exact price, which they deserve.

These folks had not gotten a bid, only looked at Ikea online or something.

Not that long ago a guy came in with a layout for me to bid on. I spent a half hour or so going over it with him and bid it up and contacted him to talk about the price. I bid it tight, rather on the low side. I came up with like $8500 and slashed it to get there. His comment was, we can get it for $4000 for big box - we want to try to get it down some. I thanked him for his time and wished him well.

I do like the idea of showing pictures with the costs for those projects. It shows them what you charged for those jobs, but unless they are the same size it still leaves them wondering and will not give them an exact price, which I would rather do.



From contributor K:
I think probing the customer with budget/range/picture options is simply a way for us to qualify the customer to avoid uncompensated effort.

I come from a general contracting approach and I simply will not invest hours and hours in a sit down with a customer or a site visit if there isn't some serious feeling that the project has a substantial chance of moving forward. I can't count the times individuals have approached me on a whim asking for a price on a major project that may involve ten to twelve hours of estimating or more. I simply can't do it. Nor can I go to a job and do a measured takeoff for someone who is never even going to have a chance of moving forward.

This is why I do as many here have mentioned. In the early stages I present them with some options and examples of the ranges of fit and finish available and follow that up with giving them a ballpark high end and low end range of pricing. In this quick exchange I am able to let them know where I honestly feel the project will land based on my experience. This almost instantly culls out the people who are not even going to entertain your number and are in fact looking for pricing cheaper than the home center. Better to find out before you've invested the first dollar in an estimate.

I would simply be broke if I sat down and did an estimate with even a preliminary sketch for every customer that asked me for one. The time lost would be too much to bear.



From the original questioner:
This client mentioned the budget about 17 times in 2 short conversations - kinda made me ask when normally I would not .


From contributor C:
I have this problem all the time! Here are a few categories of clients:

1) Clients who think big and dream bigger, they just don't have the means to make it happen.
2) Clients who want to whittle you down.
3) Clients who have but don't want to spend their money.
4) Clients who don't have a clue about prices.
5) And of course everyone's favorite, the divided couple.

There are other types but I think you're facing the "don't have a clue" category. I should mention there are also many types of positive clients as well.

In the end all you can do is (after careful telephone screening) meet with the client to get a feel for them and the project. Give them a quote, hope and follow up with them. Sometimes it's just a matter of scheduling, timing or they forgot or were too embarrassed to call in order to eliminate items that they can't afford.

I had a quote I gave to a potential client and they actually e-mailed me to let me know they were going to use another cabinetmaker. I thanked them for taking their time to let me know what they had decided. If nothing else it was a good practice of what civil communication should be.



From contributor J:
You could ask them a lot of soft questions to get them talking about who they are:
What style are you looking for?
Have you seen anything that you really like, either in my pictures or elsewhere?
Are you looking for the cheapest possible or something more attractive, more durable, or of better quality?
Where else are you shopping?
At the same time, check out their clothes, home and furniture. Do they like cheap-n-flashy? Solid and dependable? Stylish? Classy?

These smell like time wasters to me, but I'm just going by what you said. No, I don't fault them for not giving you a budget - some people just bargain that way. I usually try to get them collaborating with me, a) because that's my style and b) because collaboration is more likely to get us both what we want.

If you have a sense they are just looking for the cheapest, say that you can't beat Home Depot and their installers, and you would not want to. Your type of work takes better materials and more time, but will look and last better. Always thank them for their interest; when their trust fund is released they may remember you. Especially if you have impressed them with how willing you are to work with them.



From the original questioner:
Speaking of Home Depot, I would never tell a potential client that I can't beat HD's prices and installers. Here is how I took work from Home Depot. When clients said they would also check with HD, I had already shown them the difference in materials - plywood versus flake board, 3/4" versus 1/2" and so on, and explained why I use plywood instead and how important it is for a long lasting product and resale value.

I told them to make sure they get prices on all wood cabinets from Home Depot. They did, and with about $2000 for install and cabinets close to the same price as mine, they realized custom was a better value for less money this time.

If they get prices on the best grade of cabinets, this will work every time. If it is the lowest cost cabinets they want, the deal is off. Also, I will make a layout the box store cannot duplicate. Get your client to fall in love with your layout and you got them usually.



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