A Client's Pricing Issues

I just saw a very funny--or is it sad?--YouTube video on how client pricing issues would get played out in real-world scenarios. My apologies in advance to those clients who understand the difference between a taco-stand taco and a filet mignon vs. those who believe they are paying for beef.

It should be said, these issues are more likely to happen with large agencies and when clients are unfamiliar with pricing structures, have not been educated appropriately about the services they are buying, or in general lack the experience or humility to succinctly acknowledge differences in expectations. This can be exacerbated when a marketing firm is too busy to develop the relationship or believes the account is too small to act as a trusted advisor.

It would be interesting to see the client-side version of this video.

See for yourself: http://www.youtube.com/watch?v=R2a8TRSgzZY

Section 1.4.2 from The Value-Based Fee Manifesto

"While the hourly fee allows the client to receive an estimate based on the amount of time the marketer will spend, the number is not written in stone. Furthermore, it is a variable that has the semblance of being an even exchange--hours for a task being completed--without respect to the importance of the task or how successfully the result meets the client need. In fact, if the results are off the mark, and more time must be spent to complete the project to the client's satisfaction, that time is billable. When a client selects a project fee, (s)he is not charged for additional time."

This is one reason why I create a custom proposal for each client that includes a project fee, not an estimate of how long it will take multiplied by an hourly rate.

What is your take on the subject?