Pricing Creativity

Mike, a friend in the creative business recently wrote, “Remember, you get what you pay for. If production is thrown in for ‘free’ as a package deal with your media buy it really has no value. Not to mention the end result can and probably will damage your brand.”

Amen, brother! All too often agencies present themselves as creators of advertising when they’re really just great media buyers. I’ll agree that effective placement is critical, but what’s being placed is just as crucial. But maybe those agencies can’t be blamed for approaching sales and billing like they do; maybe they’ve retreated to throwing in concept and development for free because it’s easier to get clients to pay for something tangible, like placement, as opposed to the intangible… creativity.

It’s true we can’t speak for other service businesses, but in our opinion creative work—that is concept development, copy writing, design and production—is the hardest field in which to get paid fair value for your work.

For one thing, people assume creative work shouldn’t take all that long. Sometimes that’s true. Sometimes the perfect idea descends like a prophetic vision and appears on the page before you can blink. Other times, and more commonly so, the right idea takes lots of coercing and soothing to come out from the shadows.

Maybe it’s easier to understand as described in the advertising documentary Art & Copy, “The frightening and most difficult thing about being what somebody calls a creative person is that you have absolutely no idea where any of your thoughts come from really, and especially you don’t have any idea about where they’re going to come from tomorrow.”

Beyond that, we find people don’t want to pay for the value of creativity. More often than not, creativity is approached as a cost or an expense. The correct stance, though, is to view it as an investment. Instead of asking how much an advertisement or commercial will cost, the correct question is “How much will I profit from this?”

Obviously, no guarantees can really be offered, but the goal of our work is that it do something. If we only wanted to make pretty pictures for a living we’d be artists. Instead, we’re advertisers… artists with an agenda to raise awareness, to draw attention, to sell something.

The most difficult creative project to price is a very special one at that: the Logo.

At Emogen, we akin logo creation with childbirth… some are born peacefully and joyfully while others are welcomed only after long and painful laboring. The labor pains of that process include discussion about the business’s personality, the purpose of the logo, the audience, the intended use, the desired emotional response and on and on. And, depending on the project, that process is sometimes easy, sometimes difficult.

Ultimately a logo will be the “face” of the company, if you will. Though in spite of this level of significance, we find that logos are one of the most—if not the most—underrated purchases that a business will make. Amazingly, instead of asking about the creative process or beginning philosophical discussions about the emotion that should be generated by a logo, more often than not the first question asked is how much will it cost?

There are three approaches to answering that question. Some design firms will charge a flat fee (the same rate regardless of the project or client), others will charge by the hour, and others still will charge based on the value.

Emogen utilizes the third method, which is often frustrating to inexperienced clients. They want us to say $99.95, but instead we say it’ll be between X and Z, where X and Z vary depending on the circumstance.

Gasp, you say? Why does the price of a logo vary? So much is taken into consideration that there is no value meal price to be had. We consider how much the client is bringing to the table in terms of preconceived ideas and preferences. We consider how many decision makers will be in on the process. We consider who the client is, how large they are, and the frequency with which the logo will be used. We also consider the fair market value of logos.

According to the latest edition of the Graphic Artists Guild's Handbook for Pricing and Ethical Guidelines, logos nationwide are priced anywhere from $3,000 to $50,000. That window is broken down based on client size as follows: Small Client (which would apply to most businesses in our market), $3k-$5k; Medium Client, $10k-$25k; and Large Client, $25k to $50k.

Rarely are we afforded an opportunity to charge within these windows. Maybe that’s because logos are so common that they have the appearance of being a commodity. Maybe it’s because business owners fail to fully grasp the importance of their logo. Maybe it’s because business owners don’t have an appropriate frame of reference. Maybe it’s simply because of the great availability of freelance designers who don’t understand the magnitude and importance of the project.

Whatever the specific reason, pricing logos—or creativity in general—is an almost ridiculous feat. It is, hands down, the most difficult part of our business. But we suck it up and deal with it, one, because at the end of the day we are here to get paid; and, two, because we want, no, need the work as a creative outlet. Much like electricity, it has to be grounded… it has to have somewhere to go.

-Sarah Warren, Emogen marketer
w/ Jake Dugard, Emogen designer

Competition Sucks

No doubt you’ve heard that imitation is the sincerest form of flattery. Having someone copy you is supposed to be flattering because it says they want to be like you.

So what about competitors? An economist would draw an eye-crossing graph showing that competitors enter a market because they recognize the potential that exists to earn a profit. Let me repeat that… competitors imitate you (i.e. enter your market) because they want to be like you (i.e. they want your profit).

[enter sarcastic chuckling from small business owners]

Sure, if you’re Jennifer Aniston it might be nice to have everyone go to the salon and ask for your haircut by name, but business competition is not flattering. It sucks. You want to focus each day on what you do best, not on fighting tooth and nail for customers.

That said, competition does signal that you are doing something right. So take a moment to bask in the glory… ok, now roll up your sleeves. There’s work to be done.

Count Your Blessings
Remember the reason you now have competition is because you are doing something right. Before you set off to acquire unclaimed market share be sure you’ve got your present share tied down.

You’ve gotten where you are today because of your current customer base. Let them know how appreciative you are for their business. While you’re at it, ask if there’s anything you should be doing that you’re not, or if there’s anything you could be doing better. Soliciting a customer’s opinion is one of the greatest ways to express how much they mean to you (especially if you act on their recommendations), because you’re giving them an opportunity to help shape your business.

Think Before You Change
Remember the reason you now have competition is because you are doing something right. Don’t feel like you have to change what you’re doing in order to compete, but don’t ignore change either.

If you’ve historically been the only provider in a market, you’ve had free reign to charge whatever you want, provide whatever level of service you want, and basically coast whenever you want. That’s the main reason competition is good for customers… it forces everyone to be on their best behavior.

But don’t just change for the sake of change. Change with a plan and purpose in mind. Consider the recommendations of your current customers. Are their recommendations valid and reasonable? Observe what your competition is doing differently than you. Is there anything that you should imitate?

Be Wary of Pricing Changes
Remember the reason you now have competition is because you are doing something right. Don’t rush into pricing changes, because you have the potential to price yourself out of business.

One of the most common soft spots for new competition to strike is your price. For sure, they could be justified in questioning what you’re charging, especially if you’ve been the only cat in town. However, they might also be inexperienced… they don’t fully understand the expense of providing the product/service or they don’t realize how valuable it is to the market. They could also be well financed, meaning that they are at leisure to assume some loss.

Promote, Promote, Promote
Remember the reason you now have competition is because you are doing something right. So, tell the market about it.

It’s time to stop viewing marketing as an expense and realize that it is an investment. Mass advertising and promotions can help you communicate to the market-at-large what you’re doing that’s so great; directed efforts can help you target and acquire that unclaimed market share; and focusing resources on sales and customer service can ensure your business continues to thrive.

Competition Will Crest
Absolutely, hands down, competition sucks. And new competition is a pain in the ass.

Have comfort, though. The same economist’s graph showing why competition exists would also show that there is an ebb and flow to competition. Ample profit in a market draws competition, but that same competition will inevitably weed out the weak.

As long as you keep your game face on and don’t ignore what’s afoot, I assure you the competition will crest and you’ll eventually get a break … at least until the next round begins.

-Sarah, Emogen marketer

Shhh... It's the Secret Marketing Recipe

The AMA approved definition of marketing is “the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”

Wait, what was that? I fell asleep.

The more concise Merriam-Webster version is “the act or process of selling or purchasing in a market.”

The rest of us would say it’s “selling something.” And I think it’s safe to say that everyone pretty much gets that concept. It’s almost as if making money is the survival instinct of the 21st century. But when push comes to shove, how does one actually market. And, more importantly, is there some secret recipe for how to reap the most profit possible from your marketing?

Believe it or not, there really is a term for the secret marketing recipe: marketing mix.

In yesterday’s blog I discussed marketing mix in terms of utilizing a variety of media to communicate a brand; however, the phrase has a much larger reach and refers to what is commonly called the Four Ps of Marketing: Product, Price, Place and Promotion.

The Fours Ps came about in the 50s or 60s as a way to classify the elements of the marketing mix. Think of them as the ingredients for the marketing recipe.

Product refers to what’s being sold (a service would also fit into this category). Price is how much the product is sold for. Place is how it will get into the hands of the end user. And, finally, promotion is how details about the product are communicated to customers.

The 4Ps are simple concepts, I know. Unfortunately, there's no secret recipe for combining them. Each business is unique, and the 4Ps are all moving parts that directly and indirectly impact one another in countless ways.

In order to maximize the bottom line, you must know what to move and when to move it. So, much like gourmet cooking, great marketing is a balance of science and art... a talent partly learned (science) and partly God-given (art).

-Sarah, Emogen marketer