Why ‘haggling’ with your agency doesn’t really help you…

Everyone loves a good bargain. Bargaining seems to be a universal trait regardless of where you come from – rich or poor; Asian or White; celebrity or pauper; heck, everyone loves the satisfaction of getting a product or service at a discount from the original price.

However, there are situations where you can’t drive a good bargain, like in a restaurant or a hospital or when paying your phone bill. In situations like these you have only two options: pay or go elsewhere.

I’ve always wondered why bargaining is the norm when it comes to dealing with specialised professional services particularly agencies and freelancers.

I’ve heard many reasons over the years, but the reality is that clients simply CAN. And the reason that they can is because we let them.

Being a business owner I am more than happy to give my clients a discount when there is a sound rationale for it. But all too often I’ve come across cases where negotiations cross the line to a point that borders on disrespect and compromises my ability to deliver the quality of work that I want to be known for and (presumably) my clients expect from me. Here are a few reasons why all this haggling has to stop:

1. Times have changed. Slavery is over…

Many business owners in this day and age have not evolved with the times and seem to think that squeezing whatever pennies from vendors or employees will get them on the Forbes list. On the contrary, it’s this kind of short-sightedness that causes many companies to remain stagnant. Like employees, if vendors are not being paid a fair amount for their services and are expected to perform to the best of their abilities, no one is going to walk away happy from this equation. These companies need to realise that if you ‘squeeze’ too hard and do not pay a fair price for services rendered, there is a serious risk that the better vendors will refuse to work for them. Agencies and freelancers do talk to each other and word gets around. Not having access to the best experts will definitely hurt these businesses. After all, they went looking for outside expertise for a reason…

“If you’ve decided on an agency based on their track record and quality of work, haggling over the final price of your campaign makes about as much sense as bargaining with the bartender at Raffles Hotel over the price of their Singapore Sling.”

2. It’s a Free Market

In Singapore if you want a drink you can choose to go to a swanky hotel and pay $40, a coffee shop and pay $5; or go somewhere in between. You even have dozens of different drinks to choose from. The same goes for agencies and freelancers. If you’ve decided on an agency based on their track record and quality of work, haggling over the final price of your campaign makes about as much sense as bargaining with the bartender at Raffles Hotel over the price of their Singapore Sling. There are countless agencies and freelancers out there to suit any budget and style. Naturally there is a quality/price trade off in there somewhere, like anywhere else. But the good news is, there are plenty of fish in sea and plenty of good deals to be had. Just don’t expect Raffles quality at coffee shop prices and you can’t go wrong.

3. Being Penny Wise and Pound Foolish is, well… Foolish…

Out of Pocket Expenses (OPEs) are the norm for transport, etc. for any PR campaign that requires ‘entertainment’ for media and going for events. To cut back on budgets, some clients expect their agencies to ‘absorb’ these costs as part of the total package. That’s like your boss asking you to pay for your own airline ticket or hotel to attend an overseas conference.

Typically, agencies are quite generous with their time and efforts, mainly because they have a vested interest in seeing their ideas and creative work represented in the best possible way and because getting good results for their clients increases the opportunity for repeat business and referrals. When clients start counting pennies and cutting corners, it puts agencies in an untenable position and sooner or later it forces them to be calculative too. This inevitably leads to projects turning into a resource optimisation exercise. When that happens, everyone loses.

4. Size doesn’t matter

Over the years of running my own agency I’ve come across a myriad of negotiating tactics from potential clients to lower my price. Most of the time these are good faith proposals and counter proposals, but there is one time that was so in your face that I will never forget it. This potential client blatantly said to me “You are small, therefore don’t ask for too much”.

Here’s the thing: whether I have 5 or 500 employees in my company, ultimately there can only be so many people who can service one account.It’s baffling that any experienced business person would decide to hire an agency based on size instead of other factors such as experience, expertise, quality and/or ideas. Such clients need to realise that, if ‘size’ is merely an excuse to haggle over price, they are only short-changing themselves. They should be paying for results and the budget is proportional to the resources it takes to achieve them. This includes how many people can be hired/allocated to work on their project, no matter what the size of the company.

5. Ultimately you’re only hurting yourself

In a nutshell you’re not doing your business any favours by underpaying the very people who can help you grow it. Other skilled professionals don’t have to deal with endless negotiations and neither should those in more creative industries.

You’re not going to bargain with your surgeon over the price of your open heart surgery, so let’s not undermine the specialists with the right set of skills that will benefit your company and grow your business.

Marketing, communications, PR, branding, design, etc. are a highly collaborative fields. It’s all about the dialogue and that goes for clients and agencies too. It’s difficult to be open and generous with your time, efforts and ideas when you’re counting pennies or when you feel you are being short changed. This is true for both the client and agency side.

Furthermore, there is no better assurance of a positive outcome than cultivating a good and long-term relationship between client and agency. The quality of output will be better and more on point in a collaborative setting and people on both sides will be more inclined to share openly and more freely (and generously) under those circumstances.

The bottom line is that different agencies come at a different price and there is always a trade-off. Its simple economics. Freelancers and smaller agencies tend to have lower overheads and hence can afford to charge less, larger agencies tend to have longer reach and can bring to bear more short-term resources during crunch times, but often come at a higher price tag. But it’s not only about size; creativity and good ideas also come at a price, so does reputation and track record. It’s important to do the research and find the right agency.

The important thing to remember is that price isn’t the principle criterion for selecting a future partner.Acting otherwise can only lead to disappointment and frustration for everyone involved. So choose wisely and watch your business grow!

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