How often have you asked the question, “How much does it cost to produce a brochure, build a large display or design an emailer?” It works well in establishing an affordable budget for a project.
If you know a company's total annual marketing budget is Rs 60 lakhs, you probably wouldn't recommend they spend half of that on one project unless there were extenuating circumstances – for example, establishing credibility against a much larger, entrenched competitor.
The big challenge with marketing is that many of us are not comfortable asking the right questions regarding the value of marketing communication output. For instance, if I spread a variety of brochures on the table and ask you to estimate the price tag for each, I doubt if many of us could even come close – and that's a huge problem for both the agency doing the work and the executive in charge of approving the budget.
For too many years, people have treated this information as if it were some kind of national security matter, and the result is widespread ignorance on both sides of the budget recommending/approving fence. Even experienced practitioners are reluctant to give out this information; it's hard enough to demonstrate “value" to a single-budget approver, who may be questioning expenditures based on misinformation or incomplete data. When the number of people exposed to these numbers starts to grow, misinformation can spread, and the potential for disaster always is there. At least you can see how advertising people become paranoid about these things.
But even though there is definitely a downside to sharing pricing information, I think the real problem is we don't share enough. If marketing and sales managers had the same familiar feel for appropriate project budgets, we'd all be a lot better off.
The predictability of marketing project costs can be demonstrated if you understand the variables. For example, printing costs are not highly variable. You can ask five printers to bid for a particular job, and the estimates will be remarkably similar (assuming they all use similar equipment). Photography costs do not exhibit much variance, either. Day rates of established photographers are easily obtained, and they will estimate their costs based on the number of days you specify. If the project requires more, their cost goes up. Illustration costs are more of a black box, but I've discovered that if you have a photography budget and decide to use illustrations instead, it's remarkable how many illustrators can be happy with that.
The main cost variables involving creative services are copywriting and layout and design. Inexperienced copywriters may ask a small rate per assignment instead of per hour, while experienced copywriters can command hourly rates, which could be pretty high. You assume the more experienced copywriters are going to be a little faster, but the main thing you're looking for is copy that quickly gets to the critical issues and explains them in easy-to-understand terms. And, of course, you're looking for a copy that produces the desired results. Even if an inexperienced copywriter wants less to write an ad, you're probably going to get better value by selecting a more experienced person. The same holds true for art directors. Their hourly rates start high but the difference in creative skills often makes the higher hourly rate people of better value.
But let's assume you've picked an agency or creative firm with experienced people and a good track record. How do you know whether you're paying a fair price or being taken advantage of? You'd like to be sure the budgets you allocate were reasonable for the tasks at hand, and the best way to do this is to develop some measurement scales. Share information with your peers. Ask them what they'd expect to pay for an 8-page brochure, a half-page colour ad or a 30-sec TVC.
The best way we can know with any certainty that what we're spending on various projects is reasonable is to pool our knowledge of costs. You see lots of great work. Wouldn't it be nice to know what people paid for it? Not only will you gain the confidence to set reasonable budgets for quality work that's more likely to have an impact on your company's business but also you'll be able to fend off the "bean counters" when they come looking for budget cuts.The bottom line: As a marketing communication specialist, you should get enough budgets for doing the right work and you should derive maximum value for the same.