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We have a client that wants to prepay their entire budget for 2019, approx $250,000. This is a mix of fees and media. They've asked for a discount if they prepay. What would you say an appropriate discount would be? A few ways we could do it, but we could not charge any commission on the media, which would come out to a 5% overall discount for them. I personally think that is a bit high, but wanted some other opinions. Thank you!!
How much are you normally marking up media? Seems like you'd be giving up a lot in markup - depending on how much of the $250k is media, and then even more with a discount if I'm understanding it right.
Greetings Rachel. Subtract the hard costs from the $250K first. Let's say it is 60%. Therefore, that will leave you with $100K for fees and media commission. Start the discussion with what you have left over, with the client. Otherwise you'll be playing the same game with the media suppliers and production vendors and then it gets complicated to track.
Should you offer 5% off the gross and using the same example, you've just discounted your fees by 25%. That is a ton of money.
If your client truly understands how you do business and you offer say, 5% on the $100,000 for advance payment, $5,000 on $250,000 is really immaterial.
Why not offer some additional services and keep the entire $250K?