Roundtables #csdam – Pricing the Value of an Idea: "
For the last couple of years we are facing an increasing pressure on rates. We are talking about hourly rates. Because that’s how we usually bill our work: On an hourly basis.
Let’s face it: There are now two pitches to win a client.
The first pitch is to the marketing team. That’s where the ideas count, the way they are executed into the different channels, how well they solve our clients problem.
Before we pop open the bottle of Champaign to celebrate our victory we are introduced to the procurement team. They have a totally different agenda. They want to buy our work as cheaply as possible. Just like a batch of screws or a set of notebooks. Comparing us to “other suppliers”, comparing the rate cards. The idea itself, the originality of our work, the quality and speed we deliver it – it’s all ignored (usually).
But the idea is the DNA of the campaign. It can be born in long ours of hard labor, it can just pop up during your morning bath – but it can then travel across the globe, be the talk of town and make the brand using it stronger and more competitive. Can you charge this on an hourly basis? Not really. It would undervalue the value created.
During our discussion we figured: When a “photographer” takes a picture for a campaign (i.e. a flower) he’s paid for the picture and the time it takes to shoot it (plus the material). Plus he charges a buyout. And that’s usually for just a year and for a specific region. If the picture should be used longer, you have to pay more. Not a fortune, but an extra charge. And if you chose to not only use it in country A but also in country B that’s also an extra charge.
If the same picture is taken by the Art Director of an agency (i.e. to make it quick – we always need to make things quick) it belongs to the client. He may use it as often and as broadly as he might chose. At least in 99% of the cases and contracts I know.
This is taken for granted – but is it fair?
In the past we as agencies did not argue on that situation because we were paid fairly on an hourly basis covering the “other” costs and allowing us to make money. But with the rate card pricing eroding further every year (because we are expected to produce cheaper every year, just like a machine – but we are humans and employ humans and no machines) this equation does not add up anymore.
So maybe we have to come up with a model where we charge for the idea itself. And for the fact that a client wants to use it. Making it clear for how long and for what area. Maybe even for what channel. If other creative industries can do it, why can’t we?
But most of all, we need to generate an appreciation for the idea itself. That it’s worthy to pay for an idea. Not for the amount of hours it takes to develop the idea. But for the idea as such. How about a campaign to communicate the value of the idea?
In the end we know: Some will charge little. Some will charge a lot. Maybe depending on the amount spent around the initial idea. Or the number of channels it spans or the timeframe it may be used. But at least we would charge for it. Separately. To give the idea itself some value back again.
Thoughts?
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