WHAT YOU’LL LEARN IN TODAY’S EPISODE:

WHAT TO DO IF A CLIENT PULLS BACK ON THEIR BUDGET

WHAT TO DO IF A CLIENT ADDS TO THEIR BUDGET

HOW TO AVOID BUDGET CHANGES BY HAVING THE CORRECT CONVERSATION IN THE BEGINNING

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We’ve all been in these client meetings where you’ve hopefully asked the client, “Do you have a budget in mind for this project?” Hopefully, they have given this some thought. But here’s the tricky part….

You have no idea what they’re basing that number on or if it’s all they can spend. 

A course member reached out asking about this issue. She said time and again she is going into these meetings, has bid the whole project out, and then the client starts adding scope of work to the project, and she, rightfully so, is saying, “Whoa, you’re going to blow your budget”. And they say, “Oh, I know. But it’s ok. I want to do more.”

Unfortunately, this is not uncommon. The opposite is also true. You build out to their budget, and they say, “Oh my gosh, no, I cannot spend this kind of money.” And then, you and your team have to start value-engineering the designs that you’ve completed. 

Neither of these scenarios would set you up to move forward with the project or complete the design you created. 

When clients pull back on their budget.

You never know what is really going on with a client’s life when they decide to lower their budget, and frankly, it’s really none of our business. 

For example, you started with a $100,000 budget, and now you have to cut back to $80,000. Now, you have to decide with the client how that will happen, and that will be different for every project. You must explain how each decision impacts the rest of the design. Perhaps it is the quality of the product, or perhaps it is the longevity of the product. There may be a variety of things that you are going to have to huddle with your team to determine – if we pull out X, then this will mean Y. Then, share that with your client. And then your team has to go back and crunch their numbers. 

This scenario also takes a lot of time.

This is where designers, and frankly, all of your tradespeople, will get frustrated. You should be working with trades who are presenting their most competitive numbers in the very first round. So, you will also need to educate your clients on how that number may not move all that much, even with the changes they request. 

It is certainly not fun and not a great use of time to be value-engineering when you’ve taken the time to design to that initial budget. 

When clients add to the scope of work.

So when you do present your design, and lo and behold, this client has found another $50,000 and wants to add on to the scope of the work. In the end, yes, it’s a good thing, but at that moment, it’s very frustrating. You just spent a couple of weeks working in the $100,000 number and have produced an amazing design that gets you that value and that dream. Now you’re telling me that you somehow found another 50k? I mean, great, but I could have designed the entire project differently had I known that we could have gone to that higher budget number! And I can promise you that the client will not see it the same way you do.

And you may have to actually start over if you’re moving the footprint of the project. 

You may race through all these scenarios in your head when they tell you this seemingly good news. 

Educate your clients!

Of course, when a client tells me they have $100,00, and my guys’ estimates and our times all come in at $105,000 or $95,000, that’s not what I’m talking about. I’m talking about when they want to remove, say, $20,000 or add $40-50,000. That can dramatically impact the project. So, while you’re going to have that educational conversation when that moment happens, the goal for you with every project and every client you meet is to avoid it entirely by educating on the front end. 

You need to educate them on these two scenarios and how they impact their project. We’ve talked about how they can impact the design, but they can also impact the amount of time, which, by the way, most of you, including myself, create flat fees for. Thirdly, they can create a problem with their project timeline. 

You need to explain to the client that the number they’re giving you will impact how you design the project. That’s a hard fact. Once you start changing one thing, it can have a snowball effect for the rest of the project. 

Flat fees

As most of you know, a few years ago, I switched over to a flat fee. 

A downside to having a flat fee is that clients may feel as though they have endless time because they aren’t billed hourly. And you and I both know that’s not the case. So, another educational element to this conversation is going to be about your time. 

Now, I’m hoping that in your contracts, you have spelled out the number of revisions that you’ve included in your flat fee. Whatever number makes you comfortable and has been working for you is what’s best. That needs to be drawn out of that contract when you’re having a discussion about it so that your client truly understands it. Your client may not think that when they want to go from $100,000 to $ 80,000, it falls under the definition of a revision.

These are the things you need to be considering at the very first stages of the project before you start designing anything. 

It is all about explaining to the client not only your expertise in the design, implementation, and management of the project but also your budgeting for the project. Of course, you need to have your clients leave a ‘padding’ in the budget for all of those ‘oh shit’ moments. We all know this and do this. But you need to ask them what that pad is, and that’s where I think designers go wrong. That’s where I think clients go wrong. They don’t always expose the ceiling where they want to spend or the basement where they want to spend. And those numbers are critical. 

Build the know, like, and trust factor as quickly as possible.

The know, like, and trust of a new client project needs to be built as quickly as possible. Some of that can be built by educating your client on why they need to trust you early in the project in order to get the design they truly want, the fees for your project that will cover you, keep you profitable and keep you on the timeline that they are hoping for. 

The next question you ask is, “Is this your top number?” I immediately share with them that I’ve had clients go through the concept of the design phase, and we present things. In those weeks, something has happened with the budget. Sometimes, it lowers, and sometimes, it raises. 

When I have those conversations, two things happen:

1. I am fully transparent. This is a microconnection that builds more trust.
2. Clients will notice. 

So, what typically happens is a more open conversation about their finances. 

You are honoring the fact that this is a lot of money. You are honoring the fact that you were brought on for your expertise to bring the design they want, their dreams, to bring them to life. And we need to be good, honest stewards of their money.

It is possible to get those conversations over and done with early. Nobody likes to talk about finances. 
But this is part of your expertise, part of your educational process that you must take your clients through so that everybody is on the same page and ultimately the projects move smoothly and stay within budget and stay within the timeline that you have estimated and most importantly you have stayed profitable.

As always, if this episode leaves you with more questions than answers, please feel free to reach out to me at renee@devignierdesign.com or shoot me a dm on social media!