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How many times have people haggled over the price of something?  It is a regular occurrence.  But few are the times when people understand the real value of a thing or service.

In the creative business of advertising it is an on-going problem: It takes an instant sometimes to come up with a brilliant idea that is worth thousands to our clients.  Sometimes it takes a long, hard week to come up with an idea for a small space ad.

So how do we price our work? Is the value creating idea worth more than the small space ad?

There has been a convention to charge on a per hour basis.  But is that fair?

We can quantify hours.  We can calculate hourly rates relating to income, overhead and profit expectations and factor in out-of-pocket reimbursements.  So setting hourly rates is a well worn path to a model for charging.

But really is it relevant?  It is like saying a truck can go faster than a motorcycle because it has more wheels.  Quantitative difference, sure.  But spurious.

So we can price our hourly services.  But do we know the value?

Is it right that creative service companies should receive a share of the reward when an idea’s resonance creates significant profit for our clients?

It seems we know the price of everything and the value of nothing.

But advertising companies are not alone.  Many of clients suffer from this same blindness.

Marketing communications companies are constantly being asked for help on small projects where “we don’t really have a budget” and “it is just a one time ad.”   Agencies comply to help out seeing there is no big benefit for the client.  But does the same client open their purse and say “We’ll pay extra for this because it is really important to us.”

The quality of something can be effected by the amount of time put into it.  Not on everything, but on most things.  And the value of knowledge is vastly underestimated.

I like to tell the story of the giant machine that worked flawlessly and old Bob who operated it.  Whirrr- whirr it went without a problem.  Old Bob retired and things went well for a while.  Then all of a sudden the giant machine started going whump-whump, whump-whump.  They called in engineers; they called in consultants.  No one seemed to have the answer.  Finally someone pointed out that the machine always worked when old Bob was running it.  “Let’s call in old Bob!”

Old Bob came it and was given a brief.  “Hmmm,” he said.  “I will need a piece of chalk and a sledge hammer.”  They got them for him.  “Turn on the machine,” he said.  Sure enough it started going whump-whump, whump-whump.  “Turn off the machine,” said old Bob.

He walked along the side of the machine, thought for a moment and finally took the chalk and put a big X on the side of the machine.  Then he picked up the sledge hammer and gave the machine a huge whack right on the X. “Turn on the machine,” said old Bob.

Whirrr- whirr went the machine as if nothing was wrong.  Everyone was jubilant.  The company president said, “Thank you, Bob.  What do we owe you?”

Old Bob thought for a moment and said “$10,003.”

“That’s a curious amount,” said the President.  “How do you get to that amount?”

“Well,” said old Bob, “I figure it is $3 for the labour – drawing the X and hitting it with the hammer.  And $10,000 for knowing where to put the X.”  So the price reflects a few minutes of work and a lifetime of learning to gain the right knowledge.  Not just a few minutes of work.

Clients have asked how we can create a commercial quickly, and I have replied that after the first few hundred, it is easy.  A few minutes of work, perhaps, and a lifetime of learning.

Nevertheless, the appreciation of quality is getting harder and harder to come by.  Computers make it easy to simulate advertising.  But appearing to be advertising isn’t real advertising.

We have all heard people mock modern art with “My kid could paint that!”  I always say, “If your kid is that good, get her into art school!  You will make a fortune.”  The mocking comment usually reflects more about the ability of the mocker to appreciate what they are looking at.

What is the value of quality in the communication arts?  Effectiveness.  Results.

The guy who says that advertising doesn’t work after doing it poorly means he doesn’t know how to do advertising.   Advertising always works if you put the right knowledge resources against it.

Coming up with the right message is the most difficult and important investment you can make in advertising.  Simulating it isn’t the answer.  Paying for the folks who have a lifetime of learning is worth it.

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