Expensive vs Low-Cost Agencies: The Real Cost of “Cheap” Thinking

The first thing most prospective clients notice on the marketing proposal is the ‘total cost’ column.

That’s normal.

Then in their minds, they weigh up the costs vs the benefits to decide whether they believe the agency can deliver on its promises, and they make a decision.

What’s not normal is when they ask you to lower your prices.

We can reduce the scope to meet your budget, but we can’t lower our prices.

Why is this?

Because then everyone loses.?

Clients want top quality and top results, right?

For that, I have to hire top people and invest all my knowledge and experience into the work.

That’s expensive.

Quality results come from quality people.

The right clients get it, and they don’t quibble over price.

(Shoutout to Charlie Stewart for inspiring this newsletter with his beautifully articulated comment on my LinkedIn post! Charlie, you said it best; I’m just rehashing it so it sinks in).?

Great people = Great results

An agency is the sum of its people.?

In Excel, it would look like this =sum([person + person + person). P.S. I love spreadsheets.

Margins are under pressure. Business units are under pressure. Directors are under pressure.

Gartner reports that marketing budgets have dropped from an average of 9.1% of company revenue in 2023 to 7.7% in 2024. The situation will likely worsen in 2025.

Every cent has to return measurable ROI, and marketing has to return ROMI.

That's why, if you spend the money, you want to go with the LOW RISK option.

And no, low risk does not mean low cost.?

It means the company with proven results that knows what to do and knows what works. And if you have the results, you shouldn't have to justify the price.?

Many companies are cost-conscious. They’re used to ‘bargaining down’ their service provider for the best prices. It’s understandable.?

But what they don’t realize is that service-based businesses are based on hiring the best people to do the work. When companies bargain down the service provider or agency, it means the agency can’t hire the best person.

This applies across industries. Think legal firms, consulting firms, marketing agencies, and even hairdressers.

It all comes down to the people doing the job.

If you want the job done well, you can’t pay plastic seat pricing and expect velvet seat results.?

If clients don’t value quality, they won't value you

When businesses question pricing or ask for discounts, they simultaneously undermine our ability to hire great people and deliver great results.?

Great work demands time, creativity, and energy. If clients are trying to squeeze the juice out of your fees, they’re already undervaluing what you bring to the table.

I tell my clients that if they insist on paying peanuts, they’ll get what they pay for.?

How to handle “cheap” clients - and get better ones

Don’t be afraid to step back if a client doesn’t value what you bring. Trying to convince a “cheap” lead of quality is like convincing a vegan to try a steak. Move on.?

The number of times I’ve sat in a meeting with a CEO and felt that niggling feeling in my gut that something isn’t right…the gut never lies! So get out of the way and don’t say yes to a client when alarm bells are ringing.?

Before signing on with a client, I suggest you call five of their suppliers. This will help you decide whether or not to work with them.?

At Shift ONE, we get a strong feel of the client in the initial meetings and believe that toxic clients show themselves early.

A client asking us to lower the price is a red flag and a reason for us to end discussions.

Results-driven businesses ask for results-driven work

Good clients get it (we appreciate you, folks!).?

They don’t negotiate on price.

Stop wasting your time. Focus on the clients who want to see what you’re worth and are ready to pay for it. As your business grows, those are the brands that’ll grow with you.

Here’s what I recommend:

1. Value the work you do.
2. Understand that the price of services limits who you can hire.
3. Have the boldness to turn work away.

What do you think? What are some red flags you’ve spotted among clients? And how do you qualify prospective clients? Let me know!