Pricing Wars - Agency/Client Dialog

This one, "The Vendor Client relationship - in real world situations", has been making the rounds. I've already heard from several colleagues that they've seen it and have even used it as part of internal, agency meetings. If you haven't viewed this, it will make you laugh and cry.



For any clients reading this: Please keep in mind that on the agency-side, we realize these are caricatures. And further, a spoof that could be produced on the many agency-side foibles related to pricing would similarly generate laughter and tears - (e.g. 2 weeks to generate a $10,000 high-level estimate).

However, determining pricing and managing expectations and scope as it relates to pricing are some of the most charged areas of agency/client relationships.

Like so much else in a partnership, clear communication up front and some organizational empathy can help avoid scenes like the ones depicted in this clip. Often issues surrounding pricing have more to do with poor communication and expectation-management than one party trying to pull something over on or unduly squeeze another - although there's certainly a bit of that floating around, especially in this pressured, economic environment.

A few things for all to keep in mind surrounding pricing include:

• It is impossible to tell how much time and money it will take to develop even a modestly complex project prior to receiving a proper brief. For a long range/complex project, even once the brief has been given and a broad solution determined, time & money can't necessarily be accurately predicted - and yes coming up with a viable, broad solution also takes time and money.
  
  
• The most accurate way to price a project is through sequential estimates that gain fidelity as insight is uncovered and actual phases of development approach. (See my posting: Letter of Agreement (LOA) - Getting paid from the beginning for more on this topic.)
  
  
• All parties need to understand that there are both activities and deliverable that need to be funded and that sometimes seemingly simple features and functions are very interconnected to other issues and take a lot of thought to execute effectively and efficiently - Right, like one of those Tiger Woods ads: 75% Preparation / 25% Execution.
  
  
• There is a wide range of variables that affect pricing of a seemingly simple scope of work, including: quality of briefing, state of assets, state of brand/style guidelines, condition of technical environment, timing pressure, client's internal structure/relationships and 3rd party involvement.
  
  
• Any agency worth its salt should be able to clearly articulate what is known and what is not known and the basis for their pricing.
  
  
• When bids come in with gaping discrepancies, more often than not, there are not shared assumptions about the scope of the project.
  

So, here's to hoping that collectively agencies and clients can bring "getting what you pay for" and "paying for what you get" a bit closer.