Let’s say you’re having a discovery discussion with a prospect. It’s going well.
You’ve discussed her challenge in detail. You’ve asked good questions, listened closely, and probed appropriately. The conversation is flowing, and you’re already mentally setting aside bandwidth for the project.
And then the needle scratches off the record.
You ask about budget, and the free-flowing conversation suddenly turns terse.
“We haven’t established a budget for this project,” she says.
Or the dreaded, “We were hoping you could tell us what it would cost.”
You feel the momentum dwindle, along with your enthusiasm.
What do you do?
What Not to Do
Here’s what you’re NOT going to do, my friend:
You’re not going to write a proposal.
Why? Because, despite your best efforts, you don’t have enough information to write a good one.
And drafting a proposal, in the hopes it will hit an unknown target, is a time-consuming, low-probability exercise.
I’m speaking from experience. Early in my consulting career, a mistake I made – repeatedly! – was writing proposals against unknown budgets.
The episode that broke me: After a long coffee meeting with a prospect, I spent about four hours writing a proposal.
I emailed it to her, and…
A week later, I followed up: Did she receive it, had she reviewed it, did she have any questions?
She replied with a two-word email:
You’d think she could have thanked me for my time, or provided some usable feedback. (She was instantly moved to “persona non grata” status.)
But, ultimately, the failure was mine. I hadn’t yet learned the lessons I’m about to share with you.
What to Do, Part 1: Stay in Discovery Mode
If you don’t know what the prospect expects to pay, you don’t have enough information to write an intelligent proposal.
This means you’re still in discovery mode. Stay there until you have enough information to proceed.
Importantly, keep asking questions until you understand their budget owner, buying process and expectations. Below are some common obstacles; think of yourself as the American Ninja Warrior who is about to hurdle them.
Obstacle 1: The Unknown Budget Owner
Expenses don’t approve themselves. The budget owner is the human with the authority to sign off on the project.
For larger projects, this may involve a committee; but even then, there is almost always a single person with approval power.
So, ask the prospect: “Do you have the authority to sign off on this project?”
If yes, you are talking to the budget owner. Hurray!
If no, ask a clutch of questions:
- “Who has that authority?”
- “What is the decision-making process?”
- “Can we schedule a follow-up conversation that includes the key players, to ensure that their questions are fully answered?”
Don’t be shy about asking that last one. The key players will get to know you personally (always good), and you’ll get to rep your work instead of counting on your contact to do it for you.
Obstacle 2: The History With Similar Projects
An underrated question in the selling process:
“Have you engaged in similar projects in the past, whether here or at prior employers?”
If their answer is Yes, then they almost certainly have a budget in mind. Ask about the high and low points of that past work, and their expectations of this project based on that one. Then ask what their investment in that work was. All of this will help you write a better proposal.
If their answer is No, you have a chance to educate them on benefits, outcomes and process – which will help to justify your pricing.
Again, ask these questions not just of your primary contact, but of the decision-maker and members of the buying committee.
Obstacle 3: The Unplanned Expenditure
Ask: “Is a budget established for this work?”
If yes: What is that budget?
If no: What triggered the conversation we’re having right now? What’s the need? What’s the urgency? What’s the desired outcome?
Be aware that if the prospect claims “no established budget,” that’s not a great sign. Corporate budgets, much like household budgets, signal what’s important.
But it’s not an immediate deal-killer either. Almost every departmental budget has some “rainy day” money, and padding one’s budget is a time-honored management tradition. (When I was client-side, it was one of my specialties.)
Of course, the definition of “rainy day money” varies wildly. At a Fortune 500, it may be five or six figures; at a local non-profit, it will be much less.
What to Do, Part 2: Make a Stand
Sometimes, despite your best efforts, the prospect will waffle, deflect, and do anything but give you a straight answer to your reasonable questions.
When this happens, I’m prepared to escalate, to the point of walking away, because they’re waving giant red flags that say they’re not serious about this work.
First, I will say, with my integrity 100% intact:
“My processes aren’t off-the-shelf; they’re customized to your needs. And I can’t design an intelligent process for you without some kind of budgetary guidance.”
Then – and this is very important – I shut up. I want the prospect to fill that space. This usually gets them to provide at least a range.
But if that fails, I get a little audacious:
“If I proposed a price of X, would that meet your expectations?”
What makes this audacious is the number I choose for “X.” It’s a number at the high side of my range for similar work, a number that sounds a little aggressive even to me.
It’s not as much of a gamble as it sounds. It gets the conversation unstuck, and only good things can happen from here.
If the prospect doesn’t flinch, you’ve anchored the price at a high number. This gives you maximum flexibility to build a thorough process that works well for them. And your proposal may even come in below this number – which makes you a hero.
If the prospect does flinch, they’ll usually let you know how far off you are: “I thought it would be a third of that!” (Yes, they are now giving you the answer they wouldn’t give you before.) And now you know whether you should be writing a proposal or politely ending the conversation.
How do you select an audacious number to quote? Base it on experience. Have a number in mind before you enter this discussion.
If you’re a less-experienced soloist, pick a number that you’d be happy to have accepted. And know that you’ll get better at estimating “on the fly” with time.
Aim high. And don’t be concerned about “losing the sale.” If the prospect is just kicking your tires, there wasn’t a sale to be made in the first place.
As a soloist, your time is your inventory. And a proposal is a significant investment of your time.
Before writing one, identify the budget owner, the buying process and the fee expectation. Always.
A serious buyer will recognize that money has a role in a conversation about the exchange of value. So you’re not being “difficult” by asking reasonable questions.
And an unserious buyer? That’s a waste of your time. Cut your losses and move on.
Your time is valuable, and I hope I’ve rewarded it. If so, your shares are greatly appreciated, as I try to spread the gospel to as many freelancers as possible.
I have a limited number of slots available for 1-1 coaching. I’m not some guy who’s been freelancing for a minute – I’ve been doing it since 1997, with brands you’ve actually heard of. Click here to find out more about how my coaching services can help you level up.
Copyright 2023 – Matthew Fenton. All Rights Reserved. You may reprint this article with the original, unedited text intact, including the footer section.