Understanding the dilemma between budget and cost
Posted: Tue Jan 21, 2025 8:37 am
Understanding the difference between budget and cost to better build the client's budget
Many clients encounter the budget versus cost dilemma. This occurs when the amount that could be spent (client budget) and the actual expenditure required (cost) do not match.
A common reason is that clients carefully budget their resources and set their expectations to high quality levels.
Don't know how this affects budgeting? Misalignment creates tension when discussing quality standards within financial constraints, even more so when the future sales process depends on how the competing interests are balanced.
Here are some other factors that contribute to the complexity of this dilemma:
Changing client expectations can continue to strain project budgets
Market fluctuations and unexpected expenses will ruin planned spending
Navigating this issue requires carefully negotiated agreements on realistic financial parameters.
Key Considerations During the Budget Conversation
Before managing budgets, there are certain aspects that are vital in every meeting. Although they are canadian cfo email list not official or legal, they undoubtedly mark the future of your relationships with clients.
Here are three considerations to keep in mind during a budget conversation.
Establishing clear objectives
Defining clear objectives at the beginning sets the stage for a focused conversation. Make sure both parties understand the expected outcomes of the project.
Determine what success means for the project
Discuss the client's top priorities to guide budget allocation
Make sure the goals are achievable
Many clients encounter the budget versus cost dilemma. This occurs when the amount that could be spent (client budget) and the actual expenditure required (cost) do not match.
A common reason is that clients carefully budget their resources and set their expectations to high quality levels.
Don't know how this affects budgeting? Misalignment creates tension when discussing quality standards within financial constraints, even more so when the future sales process depends on how the competing interests are balanced.
Here are some other factors that contribute to the complexity of this dilemma:
Changing client expectations can continue to strain project budgets
Market fluctuations and unexpected expenses will ruin planned spending
Navigating this issue requires carefully negotiated agreements on realistic financial parameters.
Key Considerations During the Budget Conversation
Before managing budgets, there are certain aspects that are vital in every meeting. Although they are canadian cfo email list not official or legal, they undoubtedly mark the future of your relationships with clients.
Here are three considerations to keep in mind during a budget conversation.
Establishing clear objectives
Defining clear objectives at the beginning sets the stage for a focused conversation. Make sure both parties understand the expected outcomes of the project.
Determine what success means for the project
Discuss the client's top priorities to guide budget allocation
Make sure the goals are achievable