Big Startup Question – How do You Charge for Ideas?


A lot of what I will do for clients is based around coming up with ideas – whether that be ideas for blog, video or image based content or thoughts on how they can make better use of their digital and social media platforms. As I wind my way towards launch, I’m asking myself how I can supply ideas and at the same time ensure I receive my reward (payment!) for those.

A scenario

This will be easier to explain if I spell it out in a scenario…

I am lucky enough to be contacted by a new retail brand, they have created a set of great kitchen utensils aimed at the serious home chef. Let’s call it The Super Awesome Kitchen Utensil Co. They want my help to come up with ideas for content across various formats that will target their market and inspire them to get involved with the brand and of course, the products. I’m excited at the prospect, as retail goods, especially lifestyle orientated ones are perfectly suited to the social and digital media space.

But wait a minute…

I need to be able to demonstrate these ideas to TSAKUC (first idea – never use the acronym) in order to impress them and ensure they become a client. How do I do that? Sure, I can give them a couple of ideas to whet their appetite, but will that be enough for them to commit to working with me? I can write them a proposal that includes all of the ideas and quotes a charge for those ideas – but how do I allocate a price to each and all of the ideas? Do I just charge for the time it took for me to come up with and shape those ideas? What if the business turns round and tells me the ideas aren’t good enough and they won’t pay me for my time? That is the nightmare scenario for any consultant, especially one that is starting out. An idea is so subjective that one person could think it is the best thing they have ever heard while the next person could be completely unmoved. In an ideal world I would be able to say ‘you know what, if my ideas aren’t good enough, I don’t expect you to pay me for the time’. Not possible, perhaps in the future but certainly not now. What about a situation where a business tells you they don’t like the ideas and then starts to implement them, without having paid you? Yes, you can protect those ideas, but that can be a minefield and I’m unlikely to be in a position to pursue them in court.

Now of course, the above is a worst-case scenario, and the majority of businesses and the people within them are fair, however the pricing of ideas is an issue that is causing me a little bit of lost sleep…

Over to you – what are your thoughts? Any advice from experience? Am I being a little over sensitive about this?

Image credit – http://www.paulsahre.com/

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15 Comments

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15 responses to “Big Startup Question – How do You Charge for Ideas?

  1. Welcome to the problem that the PR community has had for a long time. You do the pitch – and the pitch obviously has your best ideas in it but you don’t get paid for the pitch. In fact, many firms think you should be grateful for the chance to pitch to them.

    This has been an absolute swine for me for the last three and a half years as well (particularly as ideas are a strong point for me) but sadly there seems no change in the wind. No one pays for the ideas, people pay for the execution of the ideas.

    And don’t get me wrong, I would love that to change, but as you’ll find when you head out there, you are pitching against PR firms, marketing firms and others who are a) team-handed and b) more than happy to pitch for free.

    (Before anyone says that it is unfair, yes it is, but consider a book or a TV show. No one pays for the idea – they pay for the finished execution of the idea.)

    As for firms saying your ideas aren’t good enough and then going and using them. Again, yup, that happens. They just say that they got them from someone else who pitched, knowing fine well you won’t waste time/cash on a court case.

    In an ideal world, someone would hire you by time – from the first steps. “Can we hire you for a day to come in, see our business and give us some ideas?” You want to meet a lawyer or accountant? That’s what happens. With creatives, not so much. And you want to know the worst of it? If you take a principled stand and say ‘You want me and my time? You pay for it.” 95% of people will just shrug their shoulders and move on to the people who do that part of the process for free.

    (Sorry to be a wet blanket, but this isn’t even the worst problem you’ll have. That’ll be the firms that don’t pay out on until 90 days past invoice date – and you still have to chase them for it.)

  2. Otto Koota

    Hey Mike,

    Most of the customers are expecting you to have the ideas if you brand yourself as a consultant… In my eyes a good consultant in the creative industries has a strong network of people who can materialise the ideas you have. Make yourself into a problem solver and a go to person for solutions that benefit the companies in business terms.

    And yes every company expects things on the cheap… it is your job to convince the person holding the purse strings that YOU are worth the money you’re asking for and you have to back up the idea with why is this going to benefit the client…

    And like Craig said your biggest challenge will be cashflow… Big projects = long wait for money… so don’t look down on small projects as they will be your bread & butter 🙂

    Otto

    • Hi Otto,
      Agree re the delivery and that is something I have worked to ensure that I can do a lot of with the support of a trusted network. Thanks for your thoughts, appreciate them. I would imagine the ‘bread and butter’ jobs are often the most fulfilling?

  3. Sorry to have been the messenger of doom mate!

  4. Stephen

    We have a similar problem in our industry where several firms can work on the same project with only one being successful, and being paid. Given this, you’ll necessarily have to work on multiple pitches at any given time.

    This actually creates three main problems for the client:

    1) Quality of engagement – the consultant/firm has to work on several projects without knowing which ones will be successful, therefore can’t give any individual pitch full attention.

    2) Quality of work – can you give each one your very best ideas (based on dangers above)? Most people/clients are fair and ethical, but those who are not will burn you.

    3) Price – the client you do work with is effectively paying for those you don’t get.

    The above is obviously simplified, but if you can think about how to solve one or all of these problems, you might get closer to a solution which works for you, and your clients. As with ourselves you won’t change an industry overnight, but you can make a difference.

    Good luck with it all.

    • Hi Stephen, thanks very much for that, you’ve put those key issues across nicely. There is an opportunity to rework the model, however it will take a collaborative effort from both sides of the coin, one that I’m nit sure can happen.

  5. Hi Mike,

    Perhaps I can add a client-side perspective. It’s worth noting that I work for an organisation that is Government funded and I procure creative services including design, branding and communications services. I do however, speak only for myself.

    I understand the concern and catch 22 outlined in this post and I make a conscious effort to appoint based on criteria out with the creative ideas you mention.

    I identify a need for the work and consider who, to my knowledge, is best to deliver that. (In many situations, I am restricted by the requirement of inviting tenderers through a framework, but I speak when appointing off framework.) I write a very clear brief and invite specialists to outline the skills and experience they possess that make them suitable for delivering the work and to provide examples of pervious work. I ask them to outline their methodology, i.e. what they will do to address our need, and outline how they will go about delivery, with timescales and other resources necessary to deliver. I ask them for their price and include day and hourly rates. Finally, I ask them to provide any creative ideas they feel will strengthen their bid – but this is purely optional.

    I feel that this adequately allows us to identify the person best placed to deliver the work. And it allows consultants to use information they have already developed, rather than masses of new development that they may not receive payment for. But decisions are so often swayed by the ideas that are presented. However, I have awarded work to consultants whose ideas were pretty poor and asked them to come up with something completely new 0 but I have to be confident that they are capable.

    It might be of interest to you that the Scottish Government’s framework of design suppliers have agreed that tender invitations will not include a mandatory requirement for inclusion of creative concepts – for the very reasons you mention.

    Cheers,

    Ross

    • Hi Ross thanks for the great insight and taking the time to share it. Your approach is brilliant and really valuable for both the supplier and your business. How have suppliers reacted to it?

      • Very well Mike, in the case of the Scot Gov framework the suppliers instigated it. There can be a large number of agencies on these and it simply isn’t fair to ask a dozen organisations to design a brand or campaign, when 11 won’t see the light of day. Comms is no different. Building a great portfolio of a diverse range of clients and projects will really help you to show what you are capable of.

  6. As a PR consultant, this is a major problem of the industry (as noted by many other commenters). There will always be the clients that you spend a lot of time putting together a proposal of ideas and then never hear back or get a flat out No. And yes, sometimes they do try and implement these tactics themselves.

    I’ve found a lot of value in pre-qualifying my clients, so to speak. I meet with them at least once if not more to discuss their struggles and ideas. I never charge for a proposal (I think that’s a bit unfair), but I do gauge their level of commitment before investing any more time. I also try and get a rough budget from them. By working in budget, it presents an even stronger case to move forward with your proposal.

    Finally, I always present my ideas/solutions in such a way that it does require a level of expertise, specific contacts or a large enough time commitment that there is value in me doing this work rather than them trying to take it on themselves.

    So long as you’re adding value to their business and for a fair price, you shouldn’t have as many clients walk away without using your services.

    Hope this helps!

    -Stephanie
    http://www.bennisinc.com

    • Hi Stephanie,

      All great points thanks. for taking the time to share. One I have struggled with in the past is pre-qualification of budgets, people are often very guarded around those, when actually being more open will often help the supplier mould a much better solution/proposal.

      • Cynthia Guthrie

        Hi Mike

        As a client in the private sector I have to say that the problem we buyers of services encounter is that talking with creative industry consultants is invariably trickier than nailing jelly to the wall!

        The most critical part of the process is to listen to the client: really make the effort to understand their actual needs (which may not always be what they tell you) and provide examples of previous work you have done that will interest them. Let them speak to some of your existing clients. Be prepared to put some irresistible graphical presentation together-to test their reaction and let them get a taste for the style and quality of your work. Do not give the impression the meter’s running when you talk to the client: you are not a lawyer or an accountant.

        Most importantly set out a proposal outlining what you can do and what it will cost. Lay the proposal out clearly and succinctly and in menu style. Many clients may not have an actual budget figure in mind-by providing a menu type proposal the client then can feel that they have some control over costs and may feel more confident in partnering you rather than some wet-finger-in-the-air merchant.

        Good luck: every success with your new venture.

  7. I’m having these issues just now. I’m trying to steer a client into the right direction with their social media campaigns. I don’t mind helping and giving encouragement and help them think outside the box.

    But I’m beginning to feel I’m working for them and not getting paid. I’m not checking insights, engagement and giving new ideas. I had to say today, this is beginning to feel like a job that if you want me to take over in some capacity your going to have to decide what that is and then I can send a proposal of what my services would cost.

    I got this reply, I need some insurances this will benefit me. My jaw dropped as he has been congratulating that my ideas work and engagement is up, but money is mentioned for my ideas that work, I’m given the shoulder.

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