How agencies price a job

It’s the first thing clients look at when an agency proposal lands in their inbox – the price. We’re not expensive, we know this from our rates – compare us with other London agencies in Econsultancy’s latest rates survey – Aqueduct’s rates are on average 20% below other London agencies. Furthermore, we don’t charge for overheads. Many agencies add a percentage to their basic costs to cover for holidays, sickness, general disbursements, laziness and poor project management. We don’t. Despite these factors we sometimes find we lose out on price. Why is this?

There are a number of factors that go into putting together a price for a job. We believe that there are three types of agency when it comes to pricing:

1. “We’ll give you the best price” agencies – usually very small outfits, can afford to do a job for lower than average rates, attractive in price but often poor quality solution – takes longer, cuts corners, fails on business objectives, or ends up costing more to get what you want
2. “We’ll do what we have to to win this job” agencies – will offer a low price for initial piece of work, or sell in a low price at the start then rack up additional charges whenever the opportunity arises
3. “We will give you an honest price for quality work” agencies – like Aqueduct. You may not be presented with the cheapest price, but it’s an honest estimate based directly on scope and quality delivery

Prices often go up. We hear it from client side time and time again. Why? If you’re with agency type 1 or 2, then you can see why. If you’re with agency type 3, it’s most likely down to scope under estimating. Unstated, unrealised or (worse but most common) overlooked assumptions all contribute to rising prices.

What’s our recommendation to clients? Work with an agency or agencies to refine the scope of a job as much as possible. Take their advice on strategy and be honest about budgets and resources available. Invest in getting to accurate scope before committing to the full job with any agency. Accurate, clearly bounded scope results in an accurate, clearly bounded price. Otherwise it’s an “estimate” that may be closer to what you would like than what it will be. Trust honesty and quality, not just the price.