The Expert Podcast

If you are a professional salesperson, you may have been trained or told as part of your sales process that you need to ask your customer, "What’s your budget?" or "How much do you want to spend?" There are some merits to asking that question, and if you're a consumer, you've probably heard that question asked many, many times. So, we’re going to talk about how to handle this question or inquiry about what is your budget, both from a salesperson's and a consumer's perspective.

You may want to reconsider even asking the question or how you ask it, and we’re going to give you five bullet points about why it may actually be self-sabotage for you as a professional salesperson to ask about the budget. First of all, the reason that’s usually given in the sales training to ask about the budget is to make sure you’re showing the right product or service. There’s some benefit to that; however, that’s what's usually given on paper as the reason. Most often, the reason it's done by a salesperson is because it's defeatist. If you’re a professional salesperson, even in the highest, most advantageous professions, you’re going to have a sales closing ratio that’s single digits—maybe 10%, maybe 20%. So most of the people you talk to are not going to buy something, and that’s normal. You're going to have this rejection fear that builds up, and you just assume everybody that buys is not going to buy.

What's the biggest reason that people say at the end of your sales process that they don’t buy? They say it's too much money, or "I can’t afford it," or "It's out of my budget." That may be true, but it's really not because they can't afford it or don’t have the money. It’s that they haven’t seen the value yet. So instead of, at first, trying to be really intense on having the customer prove out their budget or what they want to spend, it’s probably better to soft-sell into that question. Even if you do somehow get a client to declare formally what their budget is, they're almost always going to hold back. If you force somebody to put a number on the table in advance of even seeing a product or service, they’re likely just going to come up with a low number because they’re already starting to feel that high-pressure, intense environment that makes them coil up in the early part of the sales process.

You want to have the customer be more open, and you want to have them create more connection with you as a salesperson, because a sales process is highly intimidating to many clients. By making it more intimidating—by putting them right on the spot and putting the spotlight on them—you're not being collaborative and you're not creating that rapport that you want with a customer. At the same time, you're talking about a very sensitive subject: their budget, money, and finances. That's not something that unfamiliar people talk about to begin with.

Look, in some sales environments, it might be very appropriate for that subject to come up. But even if it is, you want to handle it with diplomacy and tactfulness. So, what we recommend doing is, if you do need to actually get a budget before you can even start showing a product, do it in a way without directly asking. You can do that by finding out what their current product is or what other parts of their life the product will be used for. For example, let’s say we're talking about a vehicle.

If somebody’s coming into a dealership and you’re selling a vehicle, you don’t want to show them a hundred thousand-dollar vehicle if their budget is for a thirty thousand-dollar vehicle. But you want to get in the right ballpark—you don’t need to necessarily have it pinpointed exactly right. Here’s why: many times, people come into a dealership looking for a thirty-thousand-dollar vehicle (if one even exists anymore), and they end up driving out in a fifty-thousand-dollar vehicle. Why does that happen? Well, because sometimes people come in thinking they have a budget, but as you know, people get excited about a product. They get excited about features, and they get very interested in having this new thing in their life. So their original budget they started out with sometimes goes out the window. That’s what you want: you want a customer to be excited about the product, so the purchase is about their need and their desire for a product, not about just this arbitrary budget.

Certainly, people do have budgetary constraints. People can't spend more than a certain amount, and they may not be able to get approved for a loan for more than a certain amount. That’s something you want to be able to avoid at the beginning, but having that be part of the first thing you talk about sometimes backfires on you. You may lose customers and not even know why you lost them, but that’s why it started at the very beginning. Certainly, if you start out on a product or service that’s a little higher than what they can afford, you may have to back down at some point later. But give the customer a way to do that.

If you start out with something that’s too low, a lot of times, people think, "Well, if we start out with a base model of a vehicle or base model of a product or service, we can always go up." Well, not necessarily. Sometimes a person is so turned off by the sales process, or maybe that product is so lackluster to them, they don’t really want to change after that. If you start out with a vehicle that’s too cheap (with no luxury equipment), they're not going to really want to look at anything above that.

In fact, even if you do show them an upgraded model, they may not be as excited. For example, if you show a customer a Toyota Camry LE model that they like, but then you show them an XLE model with leather seats, sunroof, etc., the issue now is that the XLE might not seem appealing, because it’s essentially the same car, just with some additional features. Sometimes, showing them the upper-level model from the beginning may have gotten them more excited about the purchase.

There certainly may be scenarios where you do want to specifically ask a budget upfront with a sales client, but make sure that the reason you’re doing it is because it’s genuinely needed. Check yourself as a salesperson to make sure you’re not being defeatist just to avoid that rejection later where somebody says, "I can’t afford it." The real reason they couldn’t afford it is because they didn’t see the value in your product or service. You also don’t want to have a flashback of prior customers who told you "It’s too much money" and assume that’s why the sale wasn’t made.

Certainly, there are legitimate budget scenarios with people. But as a professional salesperson, I’m sure you know that some, if not most, of the sales successes you have involve clients spending more than they originally thought. And that’s fine—it’s not like you did anything wrong or took advantage of a customer. Most clients, once they see the value of a product or service, are going to spend more than they originally thought they wanted or needed to, because they see that it’s going to be better for them. Even in a business-to-business transaction, a company may initially look at a service as being worth $500 a month, but after seeing its value, they might decide to spend $1,000 a month because it will help their business.

So, your job as a salesperson is to show that value and why whatever the cost is, it’s going to be worth it. Don’t defeat yourself in advance by thinking they can’t afford it anyway—go through the process, because most times, the value will take care of itself.

Now, from the customer’s side, how do you approach that question? As a salesperson, think about this—it’ll help your sales process. If a salesperson asks you, “What’s your budget?” or “How much do you have to spend?” what do you do as a customer? Well, it’s difficult because sometimes you don’t know. You might think you do, maybe for a house, or you know what you can afford for a vehicle, and that’s fine. But the way you want to approach it is, "Look, I don’t have a budget."

As a business, we have people trying to sell us stuff all the time. A lot of salespeople selling business services will ask, "How much do you have to spend?" And we tell them, "We don’t have a budget. There's no limit. If something will make us two million dollars as a business, I’ve got a million dollars to spend on it." My budget is unlimited if it will help me make more money.

If you’re a consumer, I don’t have a budget. If the thing is valuable and worthy of my life, I’ll spend whatever I need to. How much would you spend to save your life? If you were arrested and charged with murder and had to pay an attorney to get you out of jail, how much would you spend? As much as I could—there’s no budget, no amount I wouldn’t spend.

On the other hand, if something isn’t worth anything—if it’s not going to help my business grow—it doesn’t matter if it costs one dollar. I can’t afford that one dollar. So as a consumer, if you're challenged by that question, you can tell them: "Look, if it’s worth a lot to me in terms of value, lifestyle, comfort, or business improvement, I’ve got a lot of money to spend. It’s not a matter of whether I can afford it."

As a salesperson, your job is to prove the value. There may be some part of the sales process where you get into pricing, maybe some negotiation, or structuring the financing to help the customer. But your product or service costs what it costs. If you’re selling a house for $600,000, it costs that much, whether the person can afford it or not.

So instead of focusing on asking what’s your budget, focus on proving the value of your offering.