Talking Budget with a Client

Most clients won't come right out and tell you how much they have to spend. But there are ways to find out what ballpark they're in. February 16, 2012

How do you get a potential client to let you know what their cabinet budget is? I want to give them an estimate that fits the budget. The latest client, when asked what their budget was, responded "We have a number in mind, but want to see where you come in first." Any other way I can word it to get them to tell me what they are willing to spend?

Forum Resposnes
(Business and Management Forum)
From contributor J:
I would think that your estimate has to fit the project, not their budget. If your price is that much up in the air, then the project probably hasn't been defined very well. So spend some time talking about the nature and quality of the project they hope to pursue. Once you have a better feel for what they want to do, you can offer some loose ballpark figures, e.g. "Well, something like A, with B and C features, might cost around $D. But you could also do X and use Y and Z, for something closer to $W. So there's a range of possibilities. Would you say your priorities are more like ABC or XYZ, or somewhere in between?"

All you really need to do is find the right neighborhood in which to work out a proposal.

From contributor V:
I have people call all the time asking about cabinets. It goes something like this…

“Ring! Ring!
Hello, I was just calling about some cabinets.
Yes, how may I help you.

I just wanted to know how much you charge for cabinets.
What kind of cabinets?
I don’t know we haven’t really decided yet - I was just calling around trying to get a ballpark, so what do you charge? Do you have a per foot price?
The best ballpark I can give you is about $2 million.
WHAAAT s!@#$ld@#$
Well, I have to know what kind of cabinets, what kind of wood, what kind of amenities, what kind of doors, where it will be installed, when it will be installed, what volume of cabinets, what style.
Oh, okay, I see.
If you can give me a little more information I can help create exactly what you want and give you a proposal based on that.”

On a more serious note, I have had very few contractors, decorator/designers, homeowners willing to divulge their budget. They feel if they tell you the number, you will bid the job all the way up to that number even if it would have been lower, and then they have paid more than they would/could/should have.

I have one contractor that walked in the first time and told me what the budget was. I had a big commercial GC ask me for a bid because the company that had been awarded the contract bailed and he told me the award amount.

If they don’t give you enough, do a normal midline bid and tell them you can do more or less and it would be reflected in the bid.

From contributor R:
This is really very simple. And upfront, I would never trust someone who didn't do this for me.

You type up a one sheet very neat and precise pricing list, with your standard way of pricing. I price by the frameless box with add-ons for crown, furniture grade end panels, raised panels, dovetails, Tandems, glazes, stains, prefinished box, etc.

Why would you ask someone to show you theirs before you show them yours, when it's so easy?

You do that and they are immediately on your side, as they know you are being honest and fair with them and not trying to squeeze more out of them because you saw the Mercedes in the driveway when you showed up (they know you didn't type this up in the driveway).

From contributor K:
When a prospect asks us how much it costs, a lot of the time they are trying to determine a budget because they have no idea what it costs. It is rare that I have a prospect tell me their budget, as they feel like they are tipping their hand.

The first response said it best when he said... "I would think that your estimate has to fit the project, not their budget."

Exactly right... The cost is the cost, but to get an understanding of where their head is at, while at the same time giving them an understanding of what things cost, our response is...

"Well, just like all cars are not created equal, the same is true of cabinetry and there are many levels of quality. Some people are able to invest between $3-$9,000.00 for basic production or apartment-grade stock cabinetry, the type that by its nature needs to be replaced more frequently, and its warranty reflects it. Then there are those customers who can afford the next level, which will get you stock to semi-custom cabinetry, with amenities, and they will typically spend anywhere from $10-$25K, depending on what they are trying to do and how extensive their project is. And then there are those where money is no object who spend anywhere from $25K up. Which level of investment do you think your family fits most comfortably?"

From contributor S:
Explain to the client that a custom woodworking project is controlled by the client's budget and you need to know their budget so you can design a project that is within their limitations.

“Mr. and Mrs. homeowner, if I were to price out a $75,000 kitchen for you, my kitchen would exceed your expectations if the budget you have in mind is around $25,000 to $30,000. And, if I were to price out a $30,000 kitchen for you, my kitchen would fall well below your expectations if the budget you have in mind is around $70,000 to $75,000. I want us to work together to identify your project's budget so that I can guide you on how you can best allocate funds from the project's budget to get the most bang for your buck.

Since you are not purchasing ready made products off the self that have fixed specifications and a fixed retail price and are instead purchasing a custom project that is built to your specifications to fulfill your needs, the products that I build can be customized in numerous ways which will affect the cost of the final product. My goal is to provide you with a proposal for a product that will closely match your customization needs while staying within your project's budget.

When a custom project is priced out, we have to start with an estimated final cost, the project budget, and then determine what customizations you want to include and eliminate the customizations you don't want to include to keep the project within your budget.

If I were to simply guess what budget you have in mind and prepare several proposals based on my guess, it could take us a very long time to arrive at a single proposal for your project that both meets your needs and your budget.

By working together and sharing information openly with one another, I am confident we will be able to customize your project to your liking while remaining within your budget. Before we can move forward and prepare a proposal for you, we need to discuss your customization needs and the project's budget.”

From contributor D:
A cabinetmaker wants to know what it will look like, then he can tell what it will cost. A designer wants to know what is needed, and will then go to the cabinetmaker to get an estimate. A salesperson wants to know how much the homeowner will spend so they can go to the cabinetmaker and get an idea of what they can make for that amount of money. The homeowner wants to know what a new kitchen will cost. This is the cabinetmaker's opportunity to help them make a budget after a short Q&A as to what they are hoping to accomplish.

The cabinetmaker that is attune to their customer's needs will make the best of this situation and walk them through the process and offer some pricing info along the way. If the cabinetmaker has the opportunity to help them devise a budget, then he should have the job, as long as their requirements are within reason.

From contributor N:
I usually pick two things, like countertops and lumber, and show them the difference in prices.

“If you go with granite or Corian or laminate tops, there is a big difference in cost between these products. In order for me to give you a competent price, it would help to have some guidelines so I know what you are looking for. “

It is also for the customer’s benefit , when comparing one price to another, that they all have the same information. Maybe show them 2 pictures of different kitchens and say, this is a $20,000.00 kitchen and this is a $60,000.00 kitchen.

From contributor R:
It may help us to ask, what is your normal kitchen? Some of these guys are throwing around 60k kitchens like it's something they do all the time. It's not for me... Can't say I've ever done a 60k kitchen even though we've done houses that are that plenty. I'd say my average kitchen is $8k-$20k.

I would say the vast majority of folks on here have a target customer and a price point they serve and if they get out of it they usually lose their shorts. Guys that are normally doing the $60k kitchen usually can't make money on a $6k kitchen and guys that make a $6k kitchen can't step up to the detail on a $60k kitchen and make money.

From contributor V:
Contributor R is right. Our kitchens range from 7k-30k. Though a year or so ago we had a client ask for a bid on 10 mil house. The cabinet bid including a library was north of 250K. Ultimately their client decided to do prefab box cabinets and have the trim guy do the library. That was an interesting choice I thought, especially for that volume of cabinets.

From contributor P:
Most homeowners have no idea what custom cabinets cost. I usually ask if they have a budget in mind. If they don't, I'll offer up a wide price range and ask if that's in their ballpark. That short conversation eliminates about 90% of the big disconnects.

From contributor R:
Where are you guys getting these folks that don't have an idea? That's rare for me. I can eliminate 95% of the tire kickers (and even then there aren't many) before we meet. Are you not getting plans faxed/emailed to you with some sort of specs? Granted often you can't do that on remodels, but even then that's half of the jobs. On the remodel jobs, or the vast majority of them, they rarely change the footprint. So have them send pictures or just a quick sketch/layout... I've never lost a customer asking for this. Because if someone isn't willing to put that little effort into it, they aren't doing more than wasting your time to begin with unless you are getting into the extreme high end where folks are just used to having others do everything for them.