Playing the Budget Showdown

Here’s the typical scenario. You’re the client, you’ve got a training project, and you’re looking for the right training development vendor. The last thing you want to do is tip your hand and show your budget. That’s like telling the car salesperson how much you’ll pay for that sweet new ride before you even start the haggling.

“What an amazing coincidence!” says the salesperson, trying to hide a smile. “That’s exactly the price my manager approved. I’ll have my team write up the papers straight away.”

The Problem

Buying custom training ain’t like buying a car. When you buy a car, you’re negotiating on a known item: four tires, an engine, and, of course, the new GPS with Mr. T’s voice. (“I pity the fool who deviates from my route!!”) The car exists, it’s tangible: you can kick the tires, recline in the leather, drive around the block.

With custom training, the process is rarely so simple. Even if you’re talking about the most basic online solution, the possible approaches and considerations are still broad. Will you develop in custom Flash, Articulate, Lectora, or Captivate? How interactive will the course be? Do you need a content-gathering or design phase? What will the interface look like and do? How will you verify learners meet the objectives? What delivery platforms will you support? And I’m just getting warmed up here…

The key point: Unlike that new car, the training solution you’re trying to buy doesn’t exist yet. So, if you solicit three bids then the chances are good that you’re getting proposals for three different models. One vendor guesses you want the economical hybrid, another sells the muscle of an SUV, and still another shows off an exotic sports car. And all you really wanted was a reliable sedan at a reasonable price.

The Advantage

Granted, this is an oversimplification. But when you choose not to provide a budget range for a project then the vendor has to decide for you, and usually on somewhat arbitrary grounds. This leads to some internal debates. For example: Should we (the vendor) include a custom task simulation? Learners will love it, and it does address a core objective, but it also raises the price and there are alternatives (read: cheaper, simpler, but not as engaging) approaches. Hmm…

Ultimately, what do you lose by throwing a bone to a set of hungry vendors and giving them a budget to work with? Personally, if I know a potential client has gone through the trouble of defining a cost range, I can better focus my energy on providing the best possible solution within that framework, rather than guessing about which features to include.

For the client, an established budget for bids usually leads to at least three advantages:

• You’ve pinned your vendors down, so you’re no longer left trying to decide among a Prius, a Hummer, and a Porsche. You choose from the best models you can afford.
• With less wiggle room, vendors are forced to work harder and provide better solutions to differentiate themselves.
• Each proposal will be viable from a cost point-of-view, and you can make an apples-to-apples comparison much more easily.

Of course, there are times when it’s difficult, if not impossible, to define budget parameters up front. And creating a preliminary budget range up front does require market awareness and planning. But the advantages of communicating a clear budget as part of a bidding process can out-weigh the risks. Especially since there’s nothing to preclude further price negotiations after the proposals have come in.

So what’s in it for us, the vendor, given the advantages for the client? Simply, vendors who believe in the integrity and quality of their proposed solutions, as Allen Communication does, welcome the opportunity to play on a level field. Knowing the budget gives us confidence to provide a highly custom, fully optimized solution—one that appropriately balances the learning objective and the business constraints. As the Mr. T GPS advises, “The no-budget jibba jabba ends here. Recalculating a better route.”