That is a great piece and quite timely for me! I work as a solution designer for a software dev company. And I just went through this exact experience yesterday with a new client.

My job requires me to design the solution from the top down with the client. So, before designers like you guys get involved (although, I know that designers tend to do a lot of this). I actually talk through a very similar story WITH my clients before I start work, so they can understand what they are doing when they make certain statements.

My experience is very similar to this script;

CUSTOMER:I really want my dream home; it will have 30 bedrooms, 5 kitchens, room for 16 cars, an Olympic size pool and tennis court. How much will that cost? ME: Sure, of course we can do that, but it will take 9 months and cost $10Million. Shall we proceed? CUSTOMER: hmmm, I only had a budget of $250K ME: OK, why didn't you tell me the budget in the first place? CUSTOMER: Well, I didn't want you to know that :-) ME: Right.... (Thinking, this is going to be fun). OK for $250K, we can build you a modest 3 bedroom home with a 2 car garage. Will that satisfy your requirements? CUSTOMER: I guess so, but can you make sure that I can build extensions on it, so I can eventually have my dream home? ME: Sure, we will make sure the architect takes that into account when they are doing the Blueprints. But it will mean some compromising. CUSTOMER: Like What? ME: Well if you want to lay down foundations for your dream home, that will probably eat up 70% of your budget. And then there will only be enough budget for a 1 bedroom home with no kitchen. CUSTOMER: That just won't do. Wow, what a disappointing experience :-(

I find that this usually happens because the customer doesn't trust the experience. They trust the house building experience, because they usually know what to expect for a certain budget. But with Software and Web Sites, they have no idea, so they don't want to disclose the budget in fear of being ripped off, because they can't measure the web site investment against the one next door.....

My 2 cents.....