Have you every thought about being up-front about your marketing budget?
So you’re in the market for a new creative team or marketing comms supplier. Have you considered being up-front about your budget?
Last week I participated in a panel discussion and the thorny question of whether or not to disclose your budget to a vendor came up. In the experience of most of the people involved in the discussion, businesses very rarely reveal their project budgets when asking for proposals.
It many respects, this is a waste – both for the business and the vendors involved.
It’s a waste of time
If the vendors have no budget guidelines, they may well prepare a proposal that addresses each requirement in great deal, the result being an all-singing, all-dancing solution that costs the earth.
The business then has the joy of reading through multiple 10-page proposals.
And if the proposed costs are too high, it’s a waste of time for both parties: a waste of time and energy discussing the brief, writing proposals and reviewing the proposals.
Wasted time = wasted money
In a service based business, this is very true indeed. More than that though, if it takes 2-3 weeks to go through the bidding process, only to discover that all the bids are higher than your budget allows, you may well have to start again. This easily adds a month or more to your project timescales, and that can be wasted money, too.
A waste of opportunity
Most vendors have a pretty good idea of what things cost. When we receive a brief here at Whitby’s, I can usually have a pretty good guess at the estimated costs for the project without writing a proposal. If a vendor knows at the outset that the budget is low, they can work with the business to find a simpler solution that is within their means.
The result in this case in a proposal that’s within budget and that ticks all the essential boxes – great for both parties.
Why do businesses hide their budgets from vendors?
The reasons vary. Some businesses are convinced that the vendors they’re working with are so unethical that they will rip them off if they know the available budget – not a good start for a working relationship. Other businesses know that their budgets are too low, but they are convinced that once a vendor has invested significant time in a proposal, they will be willing to negotiate downwards. Then there are businesses who are unclear on both the scope of the project and the budget – they’re really seeking information more than anything else.
The list goes on, but in every case, businesses who keep their budgets secret can sometimes do themselves more harm than good.
A few good reasons to be upfront with budgets
Let’s pretend that your vendors are ethical and honest. Let’s pretend that you honestly believe that you have a realistic budget for the scope of work. How can being open about your budget in your brief or your initial meetings benefit you?
If your budget is unrealistically low, your vendors will tell you immediately and you can talk about what is possible within your budget.
If your budget is too low but the work is essential, knowing that at the outset gives you a change to increase the budget. It’s much easier to revise a budget at the beginning of a project than in the middle.
If your budget is low and you can’t compromise on price or functionality, then you can go back to the drawing board. There is no need to invest lots of your time – or your vendors’ time – only to find out that you can’t afford the project.
If you believe that your budget is realistic, you should receive proposals from your vendors that are in-line with your expectations. Proposals that come in too high, in spite of you disclosing the budget, aren’t listening or need to explain why they aren’t able to meet the budget. And proposals that come in too low? Perhaps you need to check the quality of these vendors – perhaps they haven’t grasped what’s involved, or they’re desperate for the work.
Being transparent with your budget shows that you trust your vendors to give you honest input. And trust is a good way to start a new working relationship.
Being open with your budget also means that vendors who can’t meet your budget requirements can decline to quote. This saves you both time.
Would you consider being open about your budget with a possible vendor or supplier, or do you still feel that it’s right to make vendors propose to deliver all the elements of your brief with no idea if you are really willing to invest?
This is probably as much a question of ethics as it is about business. All thoughts welcome.
Until next time…