Among my favorite client testimonials you'll find two that stand out, partly because they seem to repudiate each other.

In the first, the writer says he "anguished" over hiring me because my fees were multiples of what average consultants charged. Happily, he goes on to say that I was worth the premium.

The next writer says he was very pleased because I worked within his company's budget, which was tight.

I'm not sure if one pat on the back is stronger than the next, and I'm happy for both. But from a negotiation standpoint, I believe asking up-front, "What's your budget?" can help you to come to terms fast and agreeably.

Let me make a few clear points:

(1) When buyers are shopping, often they do have explicit budgets, so it makes sense to bring them into the discussion, early on.

(2) Even if they don't have a budget, there is an implicit sense of what something is worth that most of us carry around. For example, if I told you someone charges $100,000 per hour, you'd probably exclaim, "No one is worth that!" Yet this is what former President Bill Clinton reportedly earns for a keynote speech of that or shorter duration.

(3) By inducing someone to air a figure, we get an immediate sense of whether their feet are on the ground and they have the capacity or desire to pay us our due.

(4) We seem reasonable and flexible from the beginning when we indicate an interest in their constraints.

(5) If we elect to work within these constraints, our prospects cannot realistically object to our pricing, later.

(6) We can always suggest they increase their budgets or reduce their expectations.

(7) We simply don't have to do business with everyone at every price point. We can decline to negotiate further.

I was driving near Dodger Stadium when my assistant contacted me and told me a prospect phoned in about consulting.

"Did you ask them about their budget?" I probed.

"Yes, it's about $80,000," she said.

Immediately, I pulled over and called the person back, resulting in an $80,000 plus contract. That deal led to a serious six-figure engagement with an executive I met onsite that was later tapped to become the CEO of a financial company. And that led to other good things.

So, don't expect the reply to "What is your budget?" to always be miserly or out of sight.

Sometimes, it's something you can hit out of the park for a negotiation home run.

Source: Dr. Gary S. Goodman link