A question that a seller needs to know the answer to sooner or later. It’s easy to understand a buyer who is reluctant to reveal their cards. The buyer is right. No matter what budget you mention, there will always be a way to exhaust it completely. So how do you ask such a question? How can you get an honest answer? The truth is, you can’t get an answer to a question that interests you. However, you can get an answer to a question that interests the client.
Every problem has a monetary expression. If a client is unable to assess their problem in financial terms, they won’t be able to evaluate the benefits of the solution you offer either. Ultimately, you are not asking them to spend money, but to invest it. The best way to find out what budget the client has is to understand how much the problem costs them.
Just talk to the client about their business.
The bakery bakes cheese pies. Delicious cheese pies. It’s hot in the bakery during the summer, which is very bad for puff pastry. The dough dries out, and the butter in the dough melts. We need to find a way to cool the space down to 18 degrees Celsius. There are many solutions to this problem in the world, each one more impressive than the last. But… what’s the budget?
Just have a simple conversation with the client about their business. They love it and will happily share about it with you. People appreciate attentive listeners. During the conversation, you’ll learn that due to the heat, the bakery has to shut down for an average of two weeks a year. You’ll find out that a pie costs 1.3 euros, and there are competitors selling industrially produced pies for 65 cents. However, there are also customers showing increasing demand for high-quality pies specifically from this bakery. Ideally, they could sell pies for 90 cents, especially since the loan taken out 10 years ago has just been paid off, but why lower the price when demand is growing to the point that expansion is necessary? Plus, the equipment is depreciating, and they need to save funds for its renewal in about 10 years. They produce 1,500 pies a day, but they need to produce at least 3,000, and there will still be demand. Moreover, the ovens have enough capacity for expansion; they just need to add two more work tables and a few baskets for the ovens. Write down everything you’ve learned carefully, and now you can start calculating.
“The extra profit” from the pie is 1.3 – 0.9 = 0.4 euros. This amounts to 0.4 * 1500 = 600 euros per day, and over two weeks, that’s 8,400 euros. If a solution can pay for itself in 5 years (which looks good compared to the previous 10-year loan), the client will accept it. In other words, we’re talking about 42,000 euros. And these are not expenses, but investments. Moreover, if we consider the potential to expand to 3,000 pies a day, we understand that the client will be enthusiastically willing to consider solutions up to 84,000 euros. However, if you ask the client directly, “What is your budget?” you will either not get an answer or receive something that is much lower than 80,000 euros.
The mill grinds flour. The flour and grain are transported through a pneumatic pipeline. The air used for transportation, which is compressed by compressors, is heated. The mills themselves also generate heat. The flour and grain warm up and lose moisture. We are all accustomed to the idea that flour should be dry. Standards for flour specify the maximum moisture content. However, no one will pay extra for flour that is drier than the standard. If the moisture standard is 15%, and due to the heating of the product, your moisture content is at a maximum of 13%, you are losing money. How much? 2% of 500 tons a day at 50 cents per kilogram. That amounts to 5,000 euros a day or 1,850,000 euros a year in direct losses. What is the client’s budget for an air humidification system? It’s practically limitless! For a million, you can do anything. But to understand the size of the problem, you must listen carefully to the client’s story. The story of their business, the challenges they face, and the issues their competitors encounter. You will never hear a client say, “I have practically an unlimited budget.” You can only align yourself with the client, understand their problem, and see the world through their eyes. And then the question of budget won’t even arise. The question will be how much of a down payment you are willing to accept to implement the solution as quickly as possible.