Beware when “How much do you have?” is the answer to “How much will it cost?”
Many ad agencies charge for creative services this way:
1. They find out how much is in your budget.
2. That’s the price.
I think that’s theft. Legitimate businesses determine the worth of their services and price accordingly.
So when I opened the Response Agency (way back in 1994!), I decided to price according to project scope, the value I attach to my skill and expertise, and the value the client attaches to having me, versus someone else, do the project.
It’s admittedly fuzzy, but it’s fairer than simply helping myself to the client’s entire budget, earned or not. If I feel I have been fairly compensated and leave behind money I could have taken, that’s not only okay but good business.
It’s not as if my straightforward approach to pricing rewards me with increased work and loyalty. Clients tend to see what the price tag is, not what it would have been elsewhere. But that’s not the reason I do it. Integrity motivated by hope of reward isn’t really integrity anyway.
But there was one time that my policy paid off:
A newly hired account executive collected from a client twice the price I’d calculated, as his former employer would have had him do. I sat him down and said, “One, you didn’t know better, so I’ll commission you on the original amount you collected. Two, I’m going to refund half the client’s money. Three, don’t do it again.”
He thought I was naive.
A few weeks later, he was pitching a prospective client who happened to ask if he could trust that Cuno guy. “Let me tell you a story,” said the account executive. Which is what won us the account.