Which statement best describes fixed vs flexible budgets for prospecting, with an example?

• A. Flexible budget adjusts with activity levels; fixed budget stays constant.
• B. Fixed budget stays constant; flexible budget adjusts with activity levels (e.g., ad spend tied to lead volume).
• C. Both budgets adjust identically with seasonality
• D. Flexible budgets ignore lead volume

Answer: (B)

Budgeting for prospecting can be fixed or flexible. A fixed budget stays the same through the period, giving you predictable spend even if the number of leads or interactions ends up higher or lower than planned. A flexible budget adjusts with activity levels, so spend scales up or down with actual lead volume or other drivers of prospecting effort.

For example, you might tie ad spend to lead volume: spend equals a cost per lead times the number of leads generated. If you project 200 leads at $50 each, the budget would be $10,000; if only 100 leads come in, the budget would be $5,000. This shows how flexible budgeting responds to real activity, while fixed budgeting keeps the amount constant regardless of results. The statement that best describes this, including an explicit example, is the one that notes the fixed amount stays constant and the flexible budget adjusts with activity.