How to get the budget and justify the cost of a project

I received a great question from @cherry_works:

When speaking to potential website clients, I’ve had a couple of them state “Well, we are doing alright, so we’re not sure spending money on a website will benefit the company”. This comment usually comes after they have received the quotation, which is always “that’s more than we expected”, which in turn is always after the budget question, to which they reply “We don’t have a budget expectation, how much does a website cost”.

There’s a few interesting statements in there so I’ll attempt to tackle them separately.

“We don’t have a budget expectation, how much does a website cost?”

Even when a client says they don’t have a budget expectation, they do. They might not have a budget per se, but they will have a number in mind, whether they know it or not, in the same way we have a number in mind when we walk into a store to buy something.

Clients are often reluctant to share their budget because it puts them in a weaker position when negotiating. Their thought pattern is understandable: “If I say my budget is £5,000, they’ll charge £4,999”. If they say a number, they’ve put their cards on the table. And the easiest way to counter this is to put your cards on the table first.

Jason Fried wrote about getting the budget out of a client:

Try this: When they tell you they don’t have a number say, “Oh, ok. So a $100,000 solution would work for you?” They’ll quickly come back… “Oh no, probably something more around $30K.” BINGO: That’s the budget.

If they won’t share a number, do it for them. Start with something like: “We’ve worked with other companies of a similar size and costs usually start from around £3,000. Are we in the right ballpark?”

Their answer will be telling. Make sure you’re paying attention and pick up the signs. They’ll either take comfort that the price is within range or they won’t. Establishing what they are willing to pay is critical. If their budget is too low and you can’t do anything meaningful for them, you should walk away.

It’s tempting to take jobs at lower prices to ‘win the contract’, but avoid it if you can. It keeps you looking like a professional (you didn’t lower your rates) and you don’t look desperate for work. You can of course keep this friendly. Pass them on to someone who can work to their budget or recommend an online service such as Squarespace.

Get the budget before writing a proposal

When I first started out, I found it difficult to talk to clients about money. I was afraid I’d scare them away. I’d even deliver proposals without having discussed potential budgets and this usually doesn’t go down well. It’s important to ensure your expectations align with their expectations before writing a proposal.

I have a new rule now. A proposal shouldn’t include any surprises. They should already know roughly how much the project is going to cost. A proposal succinctly sums up exactly what we’ve already talked about.

“We’re not sure spending money on a website will benefit the company”

It’s important to remember sometimes they’re right. Not all businesses need to spend thousands on a website and in fact many would be just fine paying a few quid a month to someone like Squarespace. (I’m not affiliated to them — honest!)

Our job, then, is to find out the answer to that question for them. You should start looking for that answer as soon as discussions begin with the client. Get them to fill out a questionnaire and talk about the project with them, but also discuss their business.

Clients will often come to us asking for a “new, modern, fresh” website. It’s important to then dig in and find out why they want a new website. Often, you’ll find the answer by talking about their current website. Perhaps it’s not making enough sales, or it’s not generating enough traffic, or their competitors have a better website.

Discovering the underlying issues and understanding why they want a new website will help you sell the website to them.

Proposals, not quotations

I write proposals, not quotations. Quotes, at least to me, are a list of prices. “3x templates = £300, WordPress integration = £300, hosting = £50”. That’s how I quoted websites for years. The focus was on the cost of each component and, of course, the client would try and remove as much as possible to reduce the cost.

Proposals, however, focus on how the project will impact their business. Quite often, I won’t even itemise the costs. 80% of the proposal is talking about them, their situation, and the solution I’m proposing. I’m not talking in great detail about the technology or the latest coding techniques because the client doesn’t care. The client cares about getting something back from the money they put in.

A real-life example

I was in a meeting with a client recently and they posed the question: “We’re not sure we can justify the cost”. My first reaction was to empathise. I’m a business owner and I try to justify every expense too. The price was expensive and there’s no doubt they could have got a cheaper website elsewhere. I could tell he was sitting on the fence and it could swing either way.

I asked “How much is a customer worth? How many customers would it take to recoup the cost of the project?”. The client’s customers were high-value and paid expensive contracts once signed up. The client only needed 2 customers to cover the entire cost of the project.

Once we had established this, it changed the clients perception of the cost. I was able to convince them that the project was actually low-risk. We’d get 2 new customers—I was confident of that—and we’d likely get many more. I focused the conversation on reducing risk for the client and how the client would get a return on their investment, not on the technology. And I got the job.