The Art of Ballpark Pricing

If you mention the term “ballparking”, most sales managers will first turn a fiery red and then they will melt down completely. Why? Because, if not used correctly, it is an extremely dangerous sales tactic that can often be interpreted by the customer as being some sort of a verbal quote. Always remember that, unless you are very very specific, most people have highly developed selective hearing. Even then, despite your best efforts … you will lose.

I’d like to think that I’m pretty good at using ballpark pricing but I regretted doing so one time. The worst part was that I just knew that this was going to come back and bite me in the rear but the customer, who I knew, was insistent and I caved in. When final pricing came through, and the specs had changed substantially, we were probably 30% above my ballpark figure.

Conveniently, my client did not recall our full conversation and he ended up being p.i.s.s.e.d. I played the one card I had and told him that the only way that he would be satisfied that I had not misled him would be for him to get some competitive quotes. I even let him use our drawings (I wanted to ensure apples-to-apples quotes). I also suggested a couple of companies that would be on a quality par (and pricing par) with ourselves. Happy ending. I got the deal and saved the relationship.

So, why do ballpark pricing at all? It’s pretty simple. I use it to establish a budget and to qualify a potential customer. Let’s face it … when you ask someone what their budget is for a product or a project … you often won’t get a straight answer. I get that folks may not have a perfect idea of what something might cost but, just about everybody has a number that they are willing to part with.

Back in the early 2000’s I was in the commercial audio visual industry. I recall an appointment that we had with the pastor of a smaller church to discuss a new sound system along with some projection. After we had surveyed the chapel, we asked the pastor what their budget for this project might be. He told us that they had not discussed a budget and that they had no idea of what it might cost.

The second part may have been true. We threw out a number. “Well, pastor. There are a lot of options in terms of different qualities of components etc.. We could spend upwards of $100,000 if you wanted to go there?” “$100,000!? When we talked about this with our committee, they said that we could spend no more than $14,000!” Perfect. You lied to us, in front of God, and in his house. True story.

O.k. If I want to use ballpark pricing to establish a budget, what has to happen first? Great question!

You have to know your own products and services like the back of your hand and that includes what certain product configurations have been sold for recently.
Have some mathematical formula, if possible, to generate these figures. I came from the electric sign industry and, dependent on product, we might use dimensions, quantity, overall heights, and types of illumination.
You will never ballpark until you have a complete understanding of the customer’s needs.
You only use a ballpark figure when you are unable to obtain a budgetary amount through conventional methods.
When you throw out the number, be sure to go high.
How you will present this is important. I might say “Well, based on what we have discussed, if we went with (this type of sign), it would probably come back in the neighborhood of (ballpark price). Would that number work for you?”

What happens when their apparent budget cannot be met based on their identified needs? Well, that would be a whole other topic. However, if not a hard condition (I flat out do not have any more money than “x”) always remember that …

People will just about always spend more money than they had planned on providing that they see a benefit in doing so!

And, if you don’t believe me, think about your last car or house purchase.

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Craig M. Jamieson

Managing Member at Adaptive Business Services

Craig M. Jamieson is a lifelong B2B salesperson, manager, owner, and a networking enthusiast. Adaptive Business Services provides solutions related to the sales professional. We are a Nimble CRM Solution Partner. Craig also conducts training and workshops primarily in social selling and communication skills. Craig is also the author of "The Small Business' Guide to Social CRM", now available on Amazon!