The price of experience. The value of YOU.

Next time a client asks you how long it took to do something, don’t just check your time sheets, check your CV.  However quickly you work, the answer to the question : “How long did it take you?” is never ten minutes, it’s ten years.  Or fifteen or twenty or however long it took to develop the skills that enable you to do what you do.  If you only charge for your time, you’re cheating yourself and gaining no benefit at all.

So much of the creative process is now submerged in the machinisms of time sheets, you could be forgiven for thinking you’re producing commodities not ideas.  But you really shouldn’t be forgiven.  Start charging for what you’re really providing, the application of skills developed over years of your life and not contrived over the length of time it took you to read the brief and respond.

The industry tries to factor ‘experience’ into the process, with rate cards littered with ‘senior’ appendages.  Time is allocated to different levels of designers, developers, art directors and writers to make up the overall ‘value’ of the service you’re providing.   Or maybe it’s just you.  This is supposed to represent a reasonable estimate of how much time you’re spending on clients’ needs.  In practice, it’s often wildly wrong.  And it’s nothing to do with ‘value’.

The science of estimating time for creative development is seriously flawed.  You can never estimate accurately.  You can only guess.  A retrospective analysis of time sheets reveals the consistent tendency to over-service.  You or your staff have put in more time that you’d intended.  Bad estimating, inefficient working, changes to the brief, unnecessary finessing or perhaps the estimate was forced on you by the client because of budget pressures.

This business model fails to reflect why clients pay for your expertise.  If the job is done well, the difference it makes to their business is enormous.  Whilst industry averages vary significantly, the ratio of 10:1 is accurate enough to illustrate the relationship between new revenue and marketing costs.  Make £10 for every pound you spend, if you’re doing it right. 

Putting pressure on the marketing pound only jeopardises the ratio and makes it increasingly likely that you don’t do it right.  What looks like a cost saving turns out to be a ratio of an 85p spend generating £5 of revenue.  Or a lot worse.

If your clients put pressure on their budgets, share this thinking with them.  Start talking about the true ‘value’ of what you can do for them, if they let you.  Start talking about project fees, not just time.

The creative businesses doing well in this recession, and there are some, have long since adopted the model of selling value not just time.  Their clients understand the difference that good creative partners will make and rightly fear the consequences of losing all or part of their influence.

When budgets are tighter than they’ve ever been, having conversations about  ‘value’ makes a great deal of sense.  It’s no bad thing that tough times focus everyone’s mind on how money is spent.  Being forced to spend wisely is not the worst thing that could happen.  Embrace it.  Make it work for you.

Retainers have long since been out of fashion but they represent a value proposition which works for everyone.  Creative businesses can over-service their clients deliberately rather than by accident.  That’s another kind of ‘value’ but it’s never been more appropriate.  Clients get a great financial deal as well as effective advice from creatives, whose understanding is already ahead of the game. 

Your business has the considerable benefit of the client staying loyal ‘under contract’, locked in through a value offer in every sense of the word.  And you still make money because you’ve already ensured your charges are based on value and not time.

I know one company who’ve made an art out of this approach and are thriving.  They reinforce the value of their expertise with a demonstrable commitment to their client relationships by going the extra mile. 

If it gets you what you want, investing your time in this way is no different from the speculative work you give away in pitches.  It’s not necessary for every job and every client but it’s a credible option.  Just remember to remind the client how grateful they should be to you in the future.  With luck, this will help to ensure you have a future.

 

 

 

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Ray Hanks
02.07.2012