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The Estimating Question: To Fee, or Not to Fee?

The Estimating Question: To Fee, or Not to Fee?

In Second Wind's Forums, members discussed whether agencies should charge for their time spent estimating client jobs. Just as there are all kinds of clients and agencies, there are all kinds of jobs. Knowing how to estimate—how detailed the estimate needs to be, when to charge, and how you will integrate those fees into the job—depends upon each job and client situation.

Clients are always eager to know “what will this cost?”—and they will often press hard in hopes that your agency will jump quickly to an estimate. Being sensitive to the client’s wants, however, does not require that you shoot yourself in the proverbial foot (or purse, as the case may be). It is critical to quickly and accurately arrive at an estimate for each job, but you can save yourself and your agency a lot of pain by beginning with a ballpark estimate. [See Take Me Out to the Ballpark.]

Own the process

The best way to approach estimating is to make sure everyone involved “owns” the process, from the receptionist to the account assistant to the AE to the production manager. Ownership in this case means that everyone who faces the client in your agency understands at least the basics of your agency’s estimating process, so make sure you train your people so they are up to speed.

Of course, AEs and higher-level employees should be completely conversant with the estimating process. But encourage your other staffers to be aware of their part in the process. Creative people tend to believe they are not “numbers” people, often claiming a lack of interest in that side of the business… and yet, they are very aware of their own worth in terms of salary, compensation, etc. Therefore, they are more than capable of grasping, taking a role in, and tracking their impact on the estimating process as needed.

Determine the need for an estimate

The need for an estimate varies from job to job and client to client, so it’s important for AEs to flag those jobs requiring any type of estimate. Certainly smaller jobs for existing clients may not even require an estimate, depending upon your level of trust with that client. Unless you are providing a “looks like,” 5-minute estimate, that time is valuable! If a client was working with any other professional concern on a big job, paying for a scope of work (SOW) brief would be part of the price (and they would not waste hours of that entity’s time in estimating a job they weren’t going to “buy”). Try to discern whether the “client” is truly going to buy the job, or whether they are entertaining multiple estimates.     

Design a multi-level process

It may sound complicated, but having pricing levels allows you to simplify your agency’s approach to the estimating “problem.” Making a quick call on the level and complexity of the job allows you to react promptly and professionally, whether it’s a $2,500.00 quick copy and photo job, or a $250,000 annual media program. Regarding the time you spend, consider what one agency pricipal reported as his agency’s practice: “We give VERY general direction for free… anything more than that requires a fee.”

The general (non-binding) estimate

Work the “ballpark estimating” technique. For small jobs, seek to be general and provide a non-binding estimate strategy. Many clients will be satisfied if they have a good idea of what the job will cost. Others (and you know who they are!) will not. You can let those “others” know that you will, however, need to charge them for your attention to detail in meeting their specific estimate requirements.  

If the job is big enough to require a scope of work…

…then, you are looking at creating a detailed estimate, with commensurate time and effort. Good clients understand this is a part of doing business. Others, well not so much. Communication, or even over-communication, can help here. Unless you did the same job last year for the same client, the estimating process takes some time. Your clients, for better or worse, need to know that there is up-front time involved to do the job well. Some clients may require more explanation to help them understand how a good, clear estimate ensures their project will run much more smoothly. If they expect an apology, the handwriting is on the wall…

Your Time is Valuable

In many professional fields, initial consultation fees are a standard, and anticipated, part of doing business. The agency business has as many moving parts as many other businesses, as the complexity of work varies from job to job. There’s no question that your agency’s time is valuable, and often at a premium. And there’s also no question that it’s very hard to charge for work before you can even get started. As noted by Second Wind’s late founder, Tony Mikes, “…yes, count your time spent calculating an estimate, just as you would count the time spent doing art or copy. It’s all professional services.” 

You may also like:                              

Estimates, Quotes and Authorizations

Scope Creep: Setting Parameters Protects Agency Profits

Money Talks: What Goes into Ad Agency Pricing?

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