Recently I sat in on a conference call presentation from a professional consultant who was discussing the topic of “value pricing” for creative services firms. The consultant was trying to make a distinction between selling creative services based on “time or hours” versus selling creative services based on “value” to clients. Further, when one adopts a philosophy of selling value there is the opportunity to actually increase the payoff.
It was a confusing topic…because it seems to me a client relationship is first and foremost based on a value proposition and the time element is just a means to calculate and quantify the amount of effort that will go into delivering the services associated with the scope of work. The perceived value from a creative services firm can be based on interview questions and answers, past experience, portfolio of work and case studies, references and general billing rates.
The consultant made a specific point about clients. Who when he or she is presented with a proposal for delivering creative services will tend to view pricing based on time or hours in a skeptical manner. The premise being, a firm’s hourly rates will give clients a point of comparison to their own and other professional service providers—thereby setting up potential questions of worthiness.
I am interested in your reactions to this topic and perceptions about value pricing vs. hourly rates for creative and marketing services.
2 comments:
Very interesting topic! As someone
who has worked in the industry for over 10 years, it seems very odd to bill any way except on an hourly basis. Most service industries (attorneys, accountants, etc.) seem to bill in this way and no one bats an eye. I think that an hourly rate would be more preferable to clients because they can see how much time each task will take (and the rate for each person performing the task).
Too many times, Clients tend to overlook the value that their firm brings to them and focus on the hours and the hourly billing rate. “You’re going to charge me what for a brochure?” When a Client looks at the value, experience and foresight that an agency brings to table, they accept and understand that their creative partner is completely engaged in their business. When hours and dollars dictate a project, creativity can be hampered. In the long run, value pricing will cost a Client less and will deliver a better creative product.
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