When Budgets Get Trimmed

If you have ever had your well qualified and interested prospect object to your carefully prepared proposal because of budget constraints, you may get a snicker from this video. If you haven’t, you’ll snicker anyway.  This is one of my favorite videos.  It reveals how silly the negotiating we do in business can be. The situations portrayed are unrealistic and yet remarkably similar to corporate negotiations.  Whether you are selling your products or your own professional services, don’t let a limited budget take you by surprise. The Vendor Client Relationship

While it is ideal to understand your client’s budget before preparing a proposal, sometimes a prospect doesn’t have a clear budget carved out. Budgets can change at any time as well.

If your proposal is met with budget constraints, resist the request to reduce your price to meet the budget.  Unless the prospect is using this as a negotiating ploy, a limited budget doesn’t reduce the value perceived for your service.  They simply can’t afford it, at least during this budget cycle.

Assuming the budget is real, the proper response is a reduced proposal. If the price needs to be reduced, then so does the value.

Proposing three options casino at the outset can prevent this problem.  Option one should provide a full set of value, the second option should be the sweet spot that meets the client’s primary needs, and the third option should provide value but not everything needed. This is known as good, better, best packaging, or as positioned here, the best, better, good packaging (yes, the order does matter!).

Providing three options sets expectations that you can be flexible and that price will align with value.  Keep the value and price in sync and adjust to the budget. The price shouldn’t adjust to the budget while the value remains constant. I know I couldn’t ask my hair stylist for highlights and a trim and only pay for a trim, could you?

rpieracci@sbcglobal.net' About Robin Pieracci

Robin is a pricing and product marketing consultant and serves on WICs board of directors as Programs Director. She helps marketing executives and small business owners drive more profit and revenue by integrating value-based pricing with the other elements of the marketing mix. She solves pricing challenges service providers face from the creation of packages and prices to the reduction of reliance on discounts to meet sales goals. Robin oversees the WIC monthly meetings, workshops and webinars.

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