How Much Should You Pay For Marketing and Creative Services?

Not Racing To The Bottom

Marketing and creative costs are a constant question for entrepreneurs and small businesses, because they are new to the world of paying for this kind of work, and a price on service is always trickier than a price on a commodity. I've been on all sides of this question during my career, having been a client, part of the creative team, and now, the owner of my own agency. So here's what you should know.

Independent of any cachet or confidence that you have in your provider, there is a true minimum involved here, and that minimum is the cost of the creative professionals as an hourly rate for their standard of living. If you go lower than that, you are at a risk of not getting quality work, or having the provider become unavailable. It also means that hourly rate is highly dependent on where the principals live, their level of experience, what their other clients will pay, and how much time will be needed to devote to the project.

It's a little bit analogous to going out to eat. If you walked into a restaurant and saw a 39-cent dinner special, you might be tempted to go for it. It also might be palatable. But if that food is sub-standard, or likely to make you ill, it wouldn't feel like such a bargain. You also wouldn't return to the restaurant, or tell anyone else to go there. Or, worse yet, you might spread the word... and the restaurant might go out of business from selling too much food at a below market price, or might attract so much low-end clientele that it drives out their more affluent patrons.

Just like high-end cuisine, a true maximum for marketing ad creative service is somewhat theoretical. You and I might never spend four figures on dinner, but some might, especially if it's a defensible business expense. There are also some agencies, especially when it comes to brand marketing work, where no amount of money will get your project done, since the account isn't in their field of expertise. Those kind of businesses also need to have their current clients help to secure future ones. No long-term provider of quality will want to imperil their existing business, by booking time that puts them at risk of highly negative word of mouth.

So, back to the question. If you are working with an a la carte agency, you can do a rough estimate by looking at yearly salary levels for all necessary team members (copywriter, designer, coder) in your area, then dividing by 2,000 (a rough estimate of the number of billable hours per year, excluding nights, weekends and holidays). Next, you'll need to factor in any applicable expenses (image fees, proprietary fonts, coding templates), add extra hours for QA and management time, and add in likely time for revisions. You also need to know if your providers are efficient with their time, and how likely the end product is to satisfy your needs. That's why RFPs (Request For Proposal) are standard in this kind of work.

So what this comes down to is the eternal question, at least as to how it manifests for most agency projects, is Great, Fast, and Cheap. The best you can hope to achieve is two of those three. Let's get into your options.

1) Great and Cheap.

Possible paths: Catching lightning in a bottle by finding talent that's new to the field, and needs portfolio work to get established. Free-lance art through exchange sites, where a high rate of revision might be tolerable due to low rates. Or getting it so right on v1, that any v2 changes are minor.

Downside: If Great and Cheap are the only factors, projects can take a very long time. Damage to the brand can also result from approval as a matter of managerial fatigue.

Great and Cheap is usually the premise or pitch for "all in one" quotes, where you get X pieces for Y dollars. If there is incredible cost pressure, and you have enough time and discipline to manage personnel that might not share your primary language, it can work out. But at some level, it just seems like you are putting your venture at risk in a penny-wise, pound-foolish decision. It also usually winds up being something that you regret later, and revise quickly.

For clients that need Great and Cheap, it's best to establish a very stringent creative brief or direction before design work begins, stress that express turn or revisions are subject to market conditions, and limit testing options or alternatives.

2) Great and Fast.

Possible paths: Exclusive access to top-level personnel, either through a personal relationship or cost premium.

Downside: Hard stop to iterations, opportunity costs from non-prioritized projects.

Great and Fast can lead to spikes from overtime rates, especially when it's a situation where go-live on a certain date is critical. It's best used when services are re-sold, or when spend can only start on approval.

If you can write off creative costs in the face of other business factors, Great and Fast can be highly lucrative for all concerned... but it can also lead to burnout of your principals. Saving the day is a great feeling for a creative pro, but if you are saving the day every day, you start to look for easier clients to manage.

3) Fast and Cheap.

Possible paths: Exclusive access to a junior level designer.

Downside: Working to template work, with limited technical complexity. Can also lead to branding challenges.

This approach is feasible when you are working in small spaces, or in a clearly defined medium. It's the kind of work that is the most likely to be replaced by automation. As such, it's the least appealing job for any creative pro of quality.

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Finally, a question to those who want to offsource creative work for the lowest possible rate. It may come off as snarky or provincial, but that's not really my intent.

Why do you hate America?

I get that pricing, especially all-inclusive package rates when your designer is working in an area where costs of living are lower, can seem inevitable. If your only goal is to see many options, and you've got plenty of time and patience to shine up from v1 to v8, plenty of other people have made this choice.

But there's also something to be said for working with providers who share your relative time zone for easier revisions, don't have Second Language issues to overcome, and share similar cultural touch points. And getting what you need on v2 or v3 is just a better way to live your life.

When you keep your job domestic, you employ talented people who share commonality with you. They deserve a living wage for that talent, and will spend that money locally, benefiting local merchants and property values, and some of the revenue will multiply again, through tax payments and increased commerce.

It's a good thing, employing people who live in your country. It's also the only thing we do at this American agency. Beyond the patriotism. I've just never been able to get that mix of great, fast and cheap when I had to use those sources in the past. Or felt right about what I was being forced to do. 

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Connect with me personally on LinkedIn. If there's something we can work on for you, hit the form field at the top right of the page. I also welcome email at davidlmountain at gmail dot com.