Free pitching is a hot issue. Why do clients ask agencies to work for free? On many occasions, an agency will be asked to 'do the job whole' to be considered for the work. Madness.
The creative industry is the only industry, as far as I know, that gets asked to deliver work that has value, before being paid. Is this fair? Or as clients say, 'well that is just how it is'.
The creative team that are working on your free pitch, often into the night, are being paid by the agency. The lights are on, pizza has to be ordered, materials, rent and rates, all have to be paid. Them we have to come and meet you with our senior team, out of the office, whilst they are not fee earning. And what about you, the client, are you working for free during this project lifecycle?
I once challenged a charity client who had asked for a large amount of up front work, at no fee. I said, "OK, I'll get my team to do it, no fee, but your team needs to donate their wages, pro-rata to your own charity. Deal?" So the time you spend writing the brief, selecting the agencies, reviewing the work, the whole procurement process, their wages get donated, by them to the charity they are working for. That OK? Of course it ran to 1000s. They said no. We were excluded on this occasion, it was OK for us to work for free, but not them, not even for their own cause.
We get asked to deliver tenders, proposals, estimates on a daily basis. And my life we are happy to do it, but it does cost us.
We work with a number of people who help us with new business, and one particular chap explained that this is what a pitch costs a graphic design company. I thought it might be useful to see it from an agency point of view, financially.
Lets assume a client wants to see (and this is so we can illustrate we know their aims and issues are, apparently):
An identity scheme (three options preferable)
Application to key documents
Styles for Word and PowerPoint
The spec changes, it can grow or morph, but almost any free pitch has to be seen as a huge amount of work, free work. My analysis below uses low costs, lower than the industry standard.
Here's what I reckon the cost is, based on hours first:
Creative Director; Reading, questioning the brief, the briefing the design team: 3 hours
Design team: Say minimum two designers working for two days, 32 hours
Creative Director: Review work and comment, 1 hour, at £85.00
Creative team: Take on comments and create presentation, 4 hours
Production team and estimating: Most of these RFPs require a full tender response, with methodology, estimates, and schedules, 16 hours
Material costs: Of course you can present digitally, but the impact and likelihood of you winning an annual report will be reduced if you don't have printed and professionally made mock ups. It is hard to give a price for this, but given time and material I would estimate the average is £60.00 materials and 3 hours time.
Presenting and travel: Again, very difficult, but let us assume the client is in our own city and two senior members of staff on a very reasonable £85.00 per hour attend. Then we have 2 x £85.00, for the hour meeting, plus lets say £10.00 travel (I'm keeping things low here).
Ok, job done, let's see what happens... but before we do, lets see what it has cost so far. I'm going to use or lower rate of £65.00 per hour. As I understand it, this a low rate for a professional branding and design agency, with the exception of the two Directors attending a meeting.
So approximately, and if I'm honest my sums are never good, this gives the agency a bill of:
£4,95.00 as an upfront cost
But wait, this is where my pal gives his advice. We have to account for the fact the the people working on the tender or graphic design proposal would have been working on fee earning work. So the time they spent working on this no-fee project, and the work they should have been doing – wasn't done.
I'm no economist, but by my reckoning, based on the above is, we have creative and PM hours, plus senior management not earning, to the extent of £3,705.00.
So far, by my reckoning it has cost my company £8,665.00
As I say, my maths ain't great, but with a margin of error and bear in mind I have not included other costs, like lights, rent, broadband, rates, the water cooler and other things design agencies seem to need. That tender is costly. Very.
Whilst being offered a tender is a privilege, take a long hard look at the specification. Is it right for you? What will it cost/what are the odds you will win it? Is this the best way for a client to buy design services?
We describe Navig8 as hungry but not starving. We'll look at any tender, and tackle it like Ninjas. But is is worth considering, when pinging out these RFPs that there is a lot of work involved.