I really enjoyed reading Chris' post yesterday "Raise Your Rates".
I thought it might be good to take the conversation further, in this case, thinking about the situation of rates and costs from the client's point of view.
Basically, a marketing department, ad agency, or small company (something we deal with a lot here) has A LOT of choices to make and a lot of people vying for their dollars. To advertise they used to only have the big three – print, tv, and radio. Now there is the Internet – and with it comes YouTube, social, banners, SEO, blogging, websites – the list goes on and changes and gets added to everyday. There's a lot of good advertising people, with a lot of good reasons that you should spend your hard earned money with them.
So, generally, when they've come to us they've already decided what the amount of money they are going to spend on the form of advertising they think we offer to them. I say "think" because video and film can take so many different forms of deployment now, and offer value the client had never considered, but that's a different post. Either way, they've decided what film and video is worth to them. A good marketing person will decide this worth based on what they can afford for this segment of their advertising, and what they can spend on promoting this advertising, and what they think they'll get out of it.
They call us in to make them a great spot, promotion, etc. Everyone wants a great spot – regardless of what they can pay. I've certainly heard people say "give me something simple" – but they still want it to be good. At this point, it is up to us to decide if we want to accomplish that at the price they are offering. Many factors other than price affect a spot's worth to us. Will this spot be so great it'll get us other work? Will it help really make one of our directors shine? Does this client really have the potential to do something great later (this often happens)? But generally this comes down to do we see eye to eye on costs. It is our job to explain why costs are what they are, and also to try to encourage the client to make good choices for their money by making the right spot for themselves and their market. Often, when we show a client what can REALLY be done with their spot, they are willing to make arrangements to make that work.
Sometimes, though, we don't see eye to eye. I recently pitched a job for an $11M/year small business that wanted to make their first TV spot. We really went to bat on them for price as a first time customer, a simple spot, etc. We still couldn't go low enough. And I'm talking lower than what we've done for $1M/year companies. Other people went lower. We lost the job. But, I think we made a good impression on them. They loved our plan, they just didn't think it was worth what they wanted out of video. My guess is, we might see them again if their feelings about our product's value to them change.
I wish them absolutely no ill will, but it's easy to feel bitter that they 'didn't make the right choice'. Why? Because we're not making widgets, or selling vacuum cleaners – we're selling a little part of ourselves if our work is to be worth a darn. And they said 'no' that, or they said it's not worth what I thought it was to them. And that can sometimes be a painful pill to swallow.
I was brought up a stockbroker's son, though, with a dad who always talked about "market value". I believe in the markets to eventually find an item's right price. I find solace in that, and so should you. We'll keep doing our good work (as Chris rightly points out - this is the sole most important aspect) and the market will dictate what we can charge for it. But if you know your market and know what the limitations and expectations are – and if you can communicate your own value proposition clearly – then chances are very good you can reach agreement with your customers. Because in the end, we all want the same thing: work that shines.