We’re Over Budget…can you reduce your price?

How often have you heard that? And here you are expecting a deposit on the order, not a renegotiation of the pricing.

To effectively manage this you will need a strategy that includes LOTS of questions to determine where you might have missed something earlier in the process AND to determine what it is they want you to do.

Ask yourself:

  1. What do they want? What are they asking for? When they tell you that the project is now over budget and EVERYONE has to cut their pricing – breathe. Just breathe. Then ask them:

“Tell me more about this……” Be in the inquiry about what happened with this project such that it’s in this place now. YOU didn’t create the over budget and you aren’t the one (or the only one) to solve it.

  1. Where did the over-runs occur? Are there other vendors and contractors on the project who presented a budget, got the project, and are now presenting a new and higher price? Ask your contact these questions…and then ask them – “How are the other vendors reducing their pricing?”
  2. Ask “What are you doing personally to address this issue?”
  3. Ask “How much to you need to reduce the project to come in on budget?” GET SPECIFICS.
  4. Ask “When is the deadline for resubmission?”
  5. Ask “If I can reduce my pricing on this, and I don’t know that I can on line items but I might be able to reduce service costs, when will I get the order?” If you are reducing your price and are STILL in competition with others, you want more of a commitment from them that is commensurate with the commitment you are making to get their business. Otherwise, this can go on indefinitely in a race to the lowest price.

It’s likely that the questions asked above were not part of your qualifying process. That’s nothing that needs defending, but it’s likely the case. If you really want to play this game, and it is indeed a game, you may need to be willing to reduce your commission to get the project. Are you willing to do that – and by how much? When you are working with advisory committees and purchasing agents it’s not the same process as working solely with a designer or an end user. The money is bigger and the stakes are higher, so the game is different. AND you have invested your time and talent in the project and want the business, right? If so, how much are you willing to invest to get it? And remember, when you do the math and it doesn’t make you a profit, you can (and probably should) walk away.


One thought on “We’re Over Budget…can you reduce your price?

  1. In the greater context, this is step 5 – Ask for Sale / Manage Concerns.
    Both those have a process and AAOOA for Managing Concerns will always move things in the right direction when we’re thrown a curve.

    Here, what I love, is a step-by-step “How To” process for a specific (and bigger game) situation.
    Great advice today!

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