When you are buying something you always want to know the price before you agree to the sale. With products it is a much simpler proposition, the product is listed with a price and that is that – you want it or you don’t. Service based purchases are a much more nuanced process though. In many sectors the relationship between supplier and buyer is a complex dance, neither side wanting to show their hand or commit to a sale, always looking to strike a balance between the best quality and the lowest price.
It makes perfect sense and seems like good business.
So the conventional wisdom suggests that when you request a service you will set out what you are looking for, the discussion with the potential supplier will run its course, and then at the end the dreaded question arrives for both parties…”what budget are you working to?”
The normal response to this question takes one of the following three forms:
- we don’t have a budget
- what would this sort of thing usually cost?
- we’re just looking for some figures at this stage
A race to the bottom
I shall now break down why all three of these statements are problematic:
“We don’t have a budget”
You do have a budget. At some point the number that is quoted becomes too high, and therefore you do have a ceiling budget.
“What would this sort of thing usually cost?”
Well it might be possible to give a ball park figure or a range, but there are two dangers with this. The first is that the initial conversation might not have enough detail to accurately and confidently quote. For example how many locations are being filmed at, the length of the video if animated, how many cameras are needed on set, etc. The second issue is that an agency will always be nervous about giving a figure there and then, for no other reason than it backs them into a corner – you can always go down on price, but it’s much harder to go up once you’ve provided a number! You don’t want to quote high as it may immediately rule you out, but you don’t want to quote too low incase there is more complexity and the original price starts to soar.
“We’re just looking for some figures at this stage.”
This statement might as well say “we are looking for looking for the cheapest price and that is the only factor that matters to us.
Why you should give a budget
This is where I will explain the merits of providing a budget when you are looking for a quote, and to do that I will use a simple analogy of buying a house.
When you are looking to buy a house you establish the absolute maximum that you can afford and then you start looking at houses for that value (or slightly above if you feel you can put a cheeky offer in!) If you have £350,000 to spend, that’s what you look to spend, you don’t normally think “well let’s see what I can get for £275,000 and save a few quid.”
The same approach should be taken for creative services. If you have £5000 available for a project, but in an ideal world you’d like to only spend £4000, make that clear. Specify that you would like to see a proposal that sets out what you could get for £4000 which is the preferred figure, and then what you could get for the extra £1000. This places all of the onus on the agency to communicate creative and innovative ideas and demonstrate where the value is with the additional expenditure. If price does become a factor in the decision making process, suggest that a more competitive option would also be welcomed. If that were me us, we would be submitting three options, one at 3, 4 and 5K and explaining the benefits of each, so you all of the information to hand and decide which choice represented the best investment and which would deliver the highest ROI.
If you don’t provide a budget, what will you receive?
In the absence of a figure you will receive one or more of the following:
- An initial e-mail quote to gauge purchaser seriousness, which lacks real detail and fails to convey the value that the supplier can provide, so you potentially miss out on a great partner. You can argue this is lazy from the agency, but with quotes taking anywhere from a couple of hours to a couple of days, it is merely a business decision to save time.
- A quote that delivers a solution that is as cheap as feasible as the signals that you’re providing all seem to be focussed around price being the primary driver, not quality, effectiveness or ROI so you never get to “see the prize you could have won”
- A quote that you never could have afforded so it wastes everyone’s time.
What if you genuinely don’t know how much video costs?
In the event that it is your first foray into video production, you may not have any idea at all how much it costs, and that is fine. There are some articles that you can access online as well as some blogs that we have written on the subject too which you can access here, but if you are just looking for some prices you need to do the following:
- Make it clear that you genuinely don’t know how much video costs and you are looking for some guide prices
- Have a well thought out brief so that an agency can accurately price against it
- If you are not sure what your brief is, send across example of other videos you have seen and like, which gives the agency an idea of what style you like and you a frame of reference to budget against
- If there is a figure that you know is just not possible – because regardless of value, sometimes there just isn’t the money – volunteer that information
- Ask questions to understand where the costs lie, video production is a complex and time consuming business so make a point of understanding where the time, and therefore budget, goes
To summarise
Video is about value, not cost. If you have a video that costs £1000 and generates no ROI it is pointless. If you have a video that costs £10,000 but generates a 10X return, well it was worth every penny and you probably would have paid double. Therefore focus on the value that this marketing asset can generate for you rather than assuming ‘all videos are created equal’.
If you have a figure, divulge it as it will deliver the following five things for you:
- Control – when you stipulate a number you now control the conversation, people will either engage or not
- Time saving – you save everyone’s time if they know the parameters they are working within, proposals take time to write and take you time to read
- A focus on value – if people know what numbers they are working towards they can focus on value, not trying to get to an artificially low number
- More creativity – if there is budget available to do better things with, you will get better output, more creative options and greater ROI
- Options – rather than one cheap option, you can expect a menu of choices that empower you to make a good business decision
