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Articles on IT Acquisition and Doing Better Deals

Tips & Tactics

Vendor Ploys

Joe's Tips<
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They Know That You Know by Steve Gutzman

In sales school 101, you are taught to ask if the customer has a budget. In buying school 101, you are taught to never reveal your budget. OK, so if these are the ground rules what exactly is said when a salesperson and customer have a meeting to discuss budget?
For starters, assume that salespeople know that you know that you are not supposed to reveal your budget. Also assume that they have rehearsed a variety of ways to talk about money, in a seemingly conversational way, without ever asking directly, “What’s your budget?”

Here are some examples:

  • The last time we did this kind of upgrade it cost about $150K. Is that what you’re expecting this time?
  • Are we in the right range between $200K and $300K? Would it be closer to $300K?
  • Is there a number beyond which this just doesn’t make sense to pursue?
  • We did a proposal last month for another company and they had almost an identical configuration – it came to about $1.5M. Is that going to fit within your cost assumptions?
  • Off the record and in round numbers, can you share with me the maximum that you’re hoping to spend?
  • Many of my customers are looking long and hard at their maintenance renewals and we’re seeing quite a few of them limit their increases to a fixed percentage. What’s been your experience?
  • Based on what you have shared with me about your requirements, you’re looking at an investment of about $125K. Before we start this trial and get your people all excited about the new technology, does it make sense to decide now if this is even affordable?
  • You won’t hurt my feelings if you tell me that this is a nice-to-have solution in a must-have budget cycle. After all, $400K is a lot of money.
  • Our competitor is usually about 25% cheaper than we are. My sense is that you’re more comfortable in that price range than in ours. Would that be correct?
  • Here is what will probably happen: You will take my proposal to your boss and he will rip it up and say that my products and services are too expensive and tell you to go back and drive a better deal. When that happens, what do you hear yourself saying to him?

 
The one thing these examples share is that the salesperson is trying to get some form of reaction – big or small, precise or general – around the question of money and budget. The salesperson will use a host of tactics that are all designed to give him or her a glimpse into what kind of price is required to win.
There is nothing inherently wrong with talking money and budget with a vendor, provided the information you give is on your terms and not a slip of the tongue to a seemingly benign conversation tactic. In these situations it is always best to remember that regardless of the budget, what you are looking for is the best ROI per invested dollar from all your vendors, and that while you may prefer a particular vendor, you do not need that vendor.

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