Why marketing providers ask what your budget is, and why you should tell them


Last updated on September 20, 2017 in Small Business Thursday

One sticking point around hiring someone for marketing services is around the cost. If you’ve ever had discussions with me or an agency/consultant, most of us will tell you that great work done by an expert does not come cheap.

In our pricing survey, you’ll learn that most agencies and consultants charge $150+ per hour for their work. You won’t see those prices on places like UpWork usually.

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You’ll also learn that the average agency or consultant in our study has a minimum project of about $1,000, meaning they will not work with you if you have less than $1,000 a month to spend. And depending on your needs and goals, their minimums may be even higher. Just check out our SEO calculator to see this in action.

So why should you a) figure out what your budget for work is and b) be willing to tell the agencies/consultants you are speaking with what it is?

There are a few reasons.

Waste less time

Hiring the right marketing provider, or any outsourced service provider, can be a time consuming and scary process in the best of circumstances. Even if you happen to find the right person early on, you’re still going to speak with a few others, ask your friends and mentors for advice, and then ultimately you’ll spend time managing that provider as part of your every day job.

If you are unclear on your own budget or the budgets within which the agency works, you’ll spend more time spinning your wheels if your budget is not large. And ironically, if you do not have a large budget you can ill-afford to spend more time that those with bigger budgets simply because your margins are tighter!

I’ve too many times seen businesses and agencies get to the end of conversations and be prepared to work together only for the discussions to fall apart when budgets came up.

Bring it up early, and you’ll waste less of your time speaking with those you cannot afford.

Avoid sticker shock

I once had a person looking to hire an agency play that they had unlimited budget. They were starting a business and had investors. I pushed pretty hard on them to try to clarify if they truly had a big budget, even giving specific numbers, and their responses told me that they did indeed.

Later on, when agencies went to pitch them with their proposals and outline of pricing for the services they needed, the person was shocked at the price of what they wanted to accomplish. They were furious.

Had they been clear earlier on their own budgets and had that discussion at the beginning, the agency could have worked within that instead of pitching the “perfect project” that never even ends up working that way anyways.

Set your own expectations

Continuing on from the above, you need to set your own expectations for how much the work you need costs. If you need help with multiple channels of marketing and each of those requires a different expertise and time spent, your budget needs to reflect that if you are doing everything at once.

As my old CEO used to say, you have time, money, and talent to spend. If you don’t have money, you need to spend time and develop talent. If you do not have talent or time, you need to have money to spend to get those things done.

You need to set your expectations for what you can get within what you can spend, and plan accordingly from there how to accomplish everything you hope to do. Business is about the long term play, and by thinking strategically and working within your means you can accomplish more than putting a tiny bit of budget into many things.

No one has unlimited resources

One intriguing mindset I’ve run into time and time again while discussing budgets with businesses is that they are ashamed of their budget, because they feel like it is too low. There are indeed people whose expectations for a tiny budget are not appropriately set, and these people often end up hiring someone overseas who doesn’t get them the result they need.

But, most of the time I find that people who think their budget is too small or who are ashamed of how low it as are actually well within the norm of what similar businesses can spend. There are very few businesses – like Google and Apple – who have essentially unlimited money to spend, and most small and medium size businesses manage their profit and loss (P&L) statements very tightly.

Don’t be ashamed if your budget is small, but also don’t expect to get $5,000 worth of work for $1,000. You goal should become to make your $1,000 grow to the point where you can increase your budget to $5,000 in order to go even faster.

What about negotiating power?

Now, some of you are probably thinking that not telling someone else your budget is a strong negotiating tactic. And the unfortunate truth is that if you are a practiced negotiator and the person you are speaking with is not, then you will likely get a lower price.

But is that actually a win?

I firmly believe in paying for the value you receive. If someone starts off telling you it will cost $5,000 but your budget has a hard ceiling of $2,000, you may be able to negotiate them down a bit. But if they go from $5,000 down to $2,000 for the exact same amount of work, you need to ask yourself why.

Are they bad at sales? Are they struggling to sign clients and so they are willing to discount their work handily in order to get you as a client? Or maybe they’re actually not that experienced and you’ll actually end up overpaying for subpar work.

The point is, getting work for cheaper than what you would have otherwise paid is not a win for either side because you are likely hiring someone without the chops to actually grow your business, and if they are charging less than they need to support the project and themselves then you won’t get their undivided attention. They’ll have to take on more clients to make ends meet, which means you get less attention from them than you otherwise should.

Where do you go from here?

There are many ways to discuss budgets with potential providers. In summary, I recommend that you:

  1. Have a strong understanding of your own finances so that you are not unduly stretched by hiring someone, just in case they cannot perform;
  2. Try to understand what a reasonable expected return will be for your spend. Not just what documents you will get, but what the traffic potential actually is;
  3. Work with the agencies you are chatting with to understand if they can work within your budget and think they can get you the return you need to see from your investment (because at the end of the day that’s what this is);
  4. Seek to grow your investment instead of trying to get everything at once if you are not on an unlimited budget (as we saw above, very very few have an unlimited budget).

Hiring an agency isn’t easy. That’s why we’re here to help you out with it.

So get in touch today and we can help you going in the right direction and having conversations with the right people.