Putting the procurement debate to bed: Blair Enns’s 3 rules for pricing creativity
Value-based pricing can close your agency’s revenue gap, but it requires culture change – so said Win Without Pitching’s Blair Enns in a closed-door session hosted by The Drum Network’s New York chapter.
Author Blair Enns speaks to The Drum about costing agency services without killing creativity. / Muillu
“The problem with procurement is that it’s evil”, jests Blair Enns, author of book-turned-movement Win Without Pitching and 2018’s Pricing Creativity. In a roundtable session for members of The Drum Network in New York, Enns made his mission clear: to shame traditional methods of procurement and change the way creative services are bought.
Here, he attests that the subject of pricing for agencies is “as vast as the subject of human judgment and decision-making”. He told The Drum his three rules for negotiating this tricky environment.
1. Cost the client, not the work
Costing can look like a lot of going back and forth and “role-playing”, says Enns. Often, agencies go into the conversation with an idea of what they can charge, but according to the contrary idea of value-based pricing, that needs to be determined by the client.
Agencies, says Enns, must abandon the mindset that set deliverables have set prices. It has to be decided on a case-by-case basis, based on the value of the work to each client. Making the necessary culture change to enact this, though, is tough; “it’s a lot of conversations with a lot of people; it’s a lot of skill building”.
Enns hints that there needs to be a degree of healthy detachment. “We’re emotionally disadvantaged in negotiations because we’re so invested in the work”, he says. “And procurement is not emotionally attached; it is incentivized on cost reduction”.
So, “how do you procure creativity efficiently, without killing it?” Enns’ answer: “You don’t”.
2. Provide multiple options
Enns advises against walking into negotiations with a single, set pricing option off the bat. As with any exchange between client and agency, this should be a value conversation, he says: agencies shouldn’t limit themselves with set prices for set deliverables. Instead, agencies should be asking, “what’s your budget; what’s the vision of success?”
Ideally, they should come armed with a guaranteed high-end solution, a low-end solution, and one or two options in the middle. “Then we can have a conversation about which of these makes the most sense. And so, you go away, you brief your team, you start with the most elaborate [option]. What will drive the most engagement? What’s the most we could do to help these people create this $50m in value?”
3. Anchor high
There’s a tendency for clients to gravitate toward the “safety of the middle”, as Enns puts it. “There’s a principle called extreme aversion; when you're presented with options, you tend to avoid the ones on the edges, the extremes. With the cheaper one, the danger is that you under-buy, and with the expensive one, the danger is that you overpay”.
When a client has their vision on the horizon and they’re looking up at what might be possible, they have a flavor for it. When you anchor high, what you're really doing is pushing your clients to think bigger, more creatively, and more expansively.