The Importance of Knowing Your Budget
Knowing what your company can afford to spend is critical for most any purchasing scenario. Shopping for branding and PR services is no different. Yet time and time again agencies and boutiques alike are faced with the prospect that does not have a budget fleshed out and ready to discuss.
Good agencies and boutiques specialize in developing custom plans and strategies designed to strike a client’s unique goals and objectives. For such agencies to truly help a potential client, understanding the budget constraint is one of the most important factors in crafting a successful program and scope of services. No two jobs are the same and pricing is seldom standardized. Firms that standardize pricing cannot be considered an ‘apples to apples” comparison to organizations that customize. Generally speaking, standardized pricing means cookie-cutter process with very little strategy and consulting to complement the final products or services delivered.
Should a firm choose to engage in an in-depth discussion with a “no budget prospect,” it often inadvertently becomes the firm’s responsibility to outline a budget. When accepting such an endeavor, the firm is shooting at an invisible target. All the while, no compensation or commitment is being provided by the prospect for time spent (at least in most cases the prospect is not prepared to invest in outsourcing a comprehensive budget exercise).
The effort required in outlining an effective budget can range from eight to twenty hours and in many cases, much more. First, the brand firm must interview and meet with all the involved decision makers. Once interviews are completed, the firm must then provide a starting point for scope and related costs. The scope and cost are usually revised and refined in several rounds; all the while the firm provides the prospect with “complimentary” consulting services.
Think of a good agency or boutique as a florist. In effect, you are asking for a beautiful floral arrangement. The arrangement can be created by using cost conscious flowers (like carnations) or by using more expensive and exotic flowers. Either way, the end-product would be attractive, but each solution would provide a completely different type of arrangement. Budget is the underlying question in dictating which arrangement is best for your specific needs and for communicating the right visual message.
To speak in design and marketing terms, let’s look at corporate branding. In order to determine the number of logo options to show, rounds of revisions to perform, or depth of a color exercise to provide, budget determines it all. Budget dictates the range and depth of possibilities a firm can provide in order to achieve the outlined goals and desired results.
By neglecting to provide a budget at the onset, the prospect is truly doing themselves a disservice. In effect, they are not allowing the firm to provide the highest value for the cost they can afford to spend. Unfortunately, so many firms are willing to entertain conversations of this nature. This results in the prospect reviewing scopes and plans that are erroneously structured where cost, and not value, is the primary focal point.
If for whatever reason, budget is simply not available, yearly revenues can be a strong measure by which to determine an appropriate budget. A ten person company billing at one million dollars per annum will not have a marketing budget at the level of a 100 million dollar company. These are obviously two very different companies with vastly differing needs. If company revenues cannot be disclosed, the Graphic Artists Guild Handbook: Pricing & Ethical Guidelines can help organize a realistic budget for graphic, brand and interactive design programs. This book outlines depth of services, which are cross referenced with a company’s yearly revenue and it assigns an ethical cost accordingly.