If all else fails, low-ball it

Agency life, PR — By on March 19, 2009 8:27 pm

In a recession competition increases. There are more agencies chasing fewer client accounts. This is generally a good thing. Clients might see one or two more firms, agencies might work harder, and hopefully the right decision will be made – the company will get the firm which is the best fit, which is good for everyone. Even for those that lose – you don't keep clients if the fit isn't right.

Now of course, over supply should create downwards pressure on total budgets and on day rates. Since staff costs are fairly inflexible this normally means margins are compressed. But there does come a point for some firms, where if costs are fixed and revenue variable, you just want some revenue. Any revenue. And that leads to low-balling, which is a practice of pitching at a ridiculously low, loss-making cost.

For the agency in question, short-term this can help cover fixed costs (mainly the rent). But as an industry it's bad practice. If you don't value your own time, then clients won't either. It's the entry point to an abusive relationship. And typically, if cost is the biggest factor in the decision-making, you'll get churned when something else comes along.

But the rent will get paid for those few months – and since rents aren't going away any time soon, I doubt low-balling will either.

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