What if the client wants to know how much you earn on it?
Collected opinions FOR and AGAINST. Representatives of Hoff and the developer Samolet, Alyona Vladimirskaya and heads of agencies took part in the discussion.
Background: we have been recording for over a year a series of interviews with different companies on the topic of choosing contractors: how companies choose agencies, what they pay attention to, what they like and dislike when choosing.
At the end of April we talked to Aircraft developer, and their CMO, Roman Senchikhin, made an interesting point about why transparent pricing for agency services is important to them:
From the point of view of finances and buying, transparency of the conditions for transactions is needed: where the agency earns from us, and how much. We understand that we are not in a socialist world where agencies work for a great idea. We just want to see the unit economy, what and how much it costs – transparent commissions, the absence of hidden services, fees, commissions, taxes, markups, etc.
This caused a heated discussion in telegram chats. Agency Management And MarCom Club. We have selected the most interesting comments.
Opinions of agencies, services and consultants
Alexander Gorbatenko
CCO at R:TA digital agency
The point of view is beautiful, but this format works very individually every time. So far, the best thing in terms of transparency is FTE work, and buying is just duplicating the price from the site.
The question is not whether implicit margins are needed or not. And the fact that not all customers are willing to pay as much as you openly expose.
And when you openly show how much you earn, many people want to pay less.
Roman Fedosov
CEO of the web integrator “Kompot”
If you follow this logic, then probably the client goes to the barbershop and asks how much the hairdresser earns on it; and when he rides in a taxi, he finds out how much Yandex.Taxi earns.
I don’t think there is even one company in the world that shows this. Why then should digital contractors do this? 🙂
I remember a good case: a client said that 1500 rubles/hour for a programmer is expensive. And now they are buying developer services at 322₽/hour, and next year they are ready to buy no more than 310₽/hour, since buyers have been tasked with reducing costs, and this is their KPI.
But the agency that supplied them with programmers at an hourly rate of 322 rubles ended up simply multiplying x10 the number of hours for each task.
But it no longer had to do with the plans of the purchasing department and their performance bonuses. Therefore, the staff of the department was not interested in this issue.
Alena Vladimirskaya
Alena Vladimirskaya’s Career Laboratory
What difference does it make how much an agency earns if you:
Not satisfied with the price – look for a cheaper one or negotiate with the current contractor.
But what a strange requirement – it is important for us that you live in poverty? The agency’s margin figures are ready to open if you buy it. Buy an agency or make your own and have access to margin figures.
I didn’t understand the point at all (but I’m not an advertising agency either). In hunting, I would simply send such a client through the forest. Regardless of its size and coolness. With a message – don’t look at that.
Maxim Pavlov
CEO kts.studio
We worked with one office associated with the oil industry. We made a mobile application – that is, the service was not advertising, we did not have agency commissions from the sites and any possible markups.
However, there should have been an estimate in the contract:
how much will we spend on payroll
how much for an office
for taxes
our profit planning.
And when closing the contract, the client wanted us to provide them with confirmation on these points – what exactly and how much they spent.
Perhaps, in industries that have existed for a long time, an understanding has already been formed – how much the contractor’s employees should receive, what equipment should be used, and so on. Therefore, it is customary to prescribe everything so transparently in the contract.
But, perhaps, such requirements were set because it was a “daughter” of the oil company – and they had to report to the “parent” organization.
Olga Kalashnikova
CEO & Co-founder at Semantex.ru
I think you need to adapt to the client’s request. If a client wants to see a pricing scheme and this is a condition for cooperation, I see no obstacles to giving it to him.
In general, I love complete transparency, it saves you from any additional explanations, explanations, excuses, etc. In our market, and so everyone roughly understands the conditions of the sites, the cost of employees, the marginality of agencies.
Agencies mostly live on commissions – unless, of course, they have their own products. Most often, an understandable and transparent pricing scheme helped justify our commercial offer and not fall in price due to dumping of colleagues in the market.
We have always considered the profitability of each project, the lowest and the highest threshold of the rate of return was introduced (it depended on the project’s turnover). There was a configurator for employees (expertise, experience), service standards.
And as soon as the client had the question “Why is it more expensive for you than for agency No. 2?” — Our managers always had a justification where it was not necessary to invent something.
It’s normal when you talk to marketers in business language, that yes, nothing is free; that there is transparent pricing, and that every business must earn, but at the same time give the expected quality of a service or product. And if the client understands this, then questions should already arise for agency No. 2.
Pavel Targashin
Digital Marketing at Fistashki
Close partnerships are fine. I know the economics and margins of our clients on some projects. And they know our economy where it matters to both of us. This is how clients understand HOW we can grow together.
In my opinion, not all clients want to squeeze their contractors dry and throw them out as useless. It depends on the adequacy of the manager.
Customer opinions
Roman Senchikhin
SMO Aircraft
My idea is not to watch PnL agencies and tinker with it. We have enough problems with our business)))
And the fact that we do not like dumping wars among tender participants, as they lead to a deterioration in the quality of services.
One of the tools to avoid this is to evaluate the unit economy, that is, whether the agency earns enough from us to maintain at least our account team and fulfill the stated agreements on the service.
Vitaly Shakhmatov
Digital CMO Hoff
We have the most transparent relationship with the general contractor. Yes, we roughly understand how much the agency earns from us, and we don’t try to spend them just on the basis of the fact that “we feel sorry”.
But, at the same time, we believe that payment should be commensurate with payroll costs and other things.
That is, we are against the approach if the agency receives billions of reverse commissions, while we still pay them from above for these sources. Roughly speaking, we have a very balanced approach, where both we and the agency benefit. That’s all I can say.
Svetlana Gordeeva
Head of Marketing Projects at the Moscow Social Development Complex
I love clear estimates, where you can see how much the agency receives (and this is OK), and how much is spent on the purchase of inventory itself.
In our case, we usually see all the bones of management, design, resizing, and so on. Over the years of work, this has helped to form an understanding of market prices and the contractor’s workload.
And there were times when I saw that the price in the offer was low – I started to dig and realized that the guys had not taken everything into account. Because of this, difficulties could then arise when it would be necessary to urgently decide: how to pay extra to the agency or not suffer in terms of quality and timing of implementation. And so we said it “on the shore” and adjusted the load and the price.
When there is a new task that has not been done before, I try to collect several understandable sentences (preferably with explanations of the bones) in order to understand where and what the difference is. There is no motivation to “break through” the lowest price here – you want to order cool things for understandable money.
What is your opinion?
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