What’s your budget? No, seriously, tell us your budget.

It’s time we had a difficult conversation. I think you’re old enough. We’ve been dancing around this issue for far too long.

We really, really need to know your budget.

I know. It’s scary. It’s a big leap of faith to tell someone your project budget up front. But it could significantly increase the quality of proposals you receive — and save you a lot of time reviewing proposals from companies that would never be a great fit for you.

Not surprisingly, the practice of not revealing a project’s budget is fairly common. Despite being one of the most important aspects of the RFP, and a key point in the decision process, many companies opt to leave their project budget out of the RFP.

Building Trust

One of the most common reasons people have for not revealing their budget: They don’t trust the vendors bidding on the projects. Maybe that’s a bit harsh, but there’s definitely a concern that a vendor will want to max out the budget while delivering as minimal value as possible.

It generally stems from not knowing the vendors well enough to trust them. That’s a normal reaction. But if you’re really looking for a vendor that you can trust long-term, revealing your budget is the first step to building trust with your prospective vendors — and all great relationships are built on trust.

The Real Cost of the Project

Another common reason that you might have for not revealing your budget: you want to know the vendor’s real cost of the project.

The problem here is that we can deliver similar feature-sets at $50K, $150K, and $300K. But there will be significant differences in these projects. To illustrate this, let’s look at an example.

Imagine you’re looking for a car. You’ll make a list of all the things you need in the car — throwing in a few things that you’d like to have, but aren’t deal-breakers (though, you’d never tell that to the sales person, right?). Let’s say you need something for your growing family.

• 5 seater with space for car seats

• hatchback for maximum use of the trunk

• compact size for city living

• good gas mileage because who wants to spend a lot on gas?

• powerful engine because who likes puttering along on the freeway?

There are many cars that can meet these requirements. There’s the $90,000 Mercedes. A $60,000 Volvo. A $20,000 Ford Focus. Huge price differences. If all you offer your dealers is your list of features, any one of them will meet your needs. But if you’re expecting the Mercedes and the dealership shows you the Focus, you’re going to think that the dealer is not a good fit for you — even though they might have the exact Mercedes you’re looking for on their lot.

Your budget really decides the type of car you get and how each of the features you listed are met. There is no one way to meet your requirements — and each approach has its advantages, disadvantages — and different price points.

What’s more, you might find that, as you talk with the dealers, you discover needs that you didn’t have before and maybe downplay some things you thought were essential. (A souped-up v6 sounds nice in principle, but maybe it prices you out of your budget — and, in reality, is something you can probably live without.)

It’s even more extreme with project work. I can deliver a proposal for a project that costs $50,000 and another, for the same functionality, that’s $300,000. The difference would be in the level of customization, integration, and polish that we can provide. As someone who is passionate about this work, I want to provide you and your company with the right solutions and as much value as possible — all within the reality of your budget.  

Finding the Right Fit

Not revealing your budget makes it incredibly difficult for you to evaluate each of your vendors for fit. Their reaction to your budget will give you valuable insights into the type of relationship you can build with this vendor.  

Does the vendor say: “$90k, great!  we can do it!” If no other vendors have had this same reaction, you can guess that this will be a pretty large project for them and they are eager for the work.

Does the vendor say: “$90k that’s not nearly enough, we’ll need at least double!” If so, you’ve probably found someone that’s just out of your price range. Sure, there are other benefits to working with someone like this. Given your budget, though, you’re just not ready for a vendor of this size.

Or does the vendor say: “$90k, we can work with that, but you may not get everything on your list.” That might hurt to hear, but you may have just found a partner — someone willing to tell you hard truths and guide you toward a solution that meets your needs and your budget.

Reading the Tea Leaves

One last consideration — perhaps something you may not have considered, especially if you have never sat on the vendor’s side: estimating projects from an RFP can be a bit like reading tea leaves.

You may have a very clear picture of what you want, but unless you have already been through a thorough discovery process and defined your objectives and key results and unless you have wireframes, full interaction requirements and page designs, that clear picture of what you want only exists in your head. (More importantly, you also have to give vendors full access to this material!)

Providing a feature list in your RFP is a starting point of a long conversation that will take place over the course of your project. A conversation that will uncover many, many details that you may not have considered up to this point. As they say, the devil is in the details.

Let’s look at another example. Telling a potential vendor “I want e-commerce” does not accurately describe the e-commerce functionality that your site needs. There are a number of ways to implement e-commerce functionality and there is a vast difference between those ways.  

It could be a very simple “out of the box” Drupal Commerce install with some themeing - that’s great- and very cheap to build.  But, if you have tons of specific processes that you need, with custom screens and workflows and 3rd party integrations, then the cost will be significantly higher. Both things are e-commerce, but 1 may be a matter of 30h of work and the other 300h or upwards depending on complexity.

Knowing the budget helps frame the vendor’s response to your rfp, because the vendor knows what level of customization will be possible within the budget and whether you are looking to build a Ferrari or a Ford.

Do you reveal the full budget?

No.

Keep 15-20% of the budget in reserve. There will always be scope issues, unless your vendor signs a contract in blood saying that there will not be any scope issues (I wouldn’t trust that vendor). Unless you like going back to your boss or committee to get additional funds, I would encourage you to keep some in reserve for these overages.

Alternative to revealing your budget

Maybe you’re not convinced -- or maybe it’s against company policy to include a specific budget. If you can’t reveal the actual budget, the next best thing would be to provide a range. Try to make the range as narrow as possible and explain the range. What do you expect at the low end? What do you expect at the high end of the range?

Bottom line: Tell us yours!

There are many reasons why a you may not want to share your budget with companies bidding on your project. Whatever the reason, it really boils down to trust. And while it might feel risky to reveal that number, the benefits far outweigh the risk.