Value Pricing

Recently I sat in on a conference call presentation from a professional consultant who was discussing the topic of “value pricing” for creative services firms. The consultant was trying to make a distinction between selling creative services based on “time or hours” versus selling creative services based on “value” to clients. Further, when one adopts a philosophy of selling value there is the opportunity to actually increase the payoff.

It was a confusing topic…because it seems to me a client relationship is first and foremost based on a value proposition and the time element is just a means to calculate and quantify the amount of effort that will go into delivering the services associated with the scope of work. The perceived value from a creative services firm can be based on interview questions and answers, past experience, portfolio of work and case studies, references and general billing rates.

The consultant made a specific point about clients. Who when he or she is presented with a proposal for delivering creative services will tend to view pricing based on time or hours in a skeptical manner. The premise being, a firm’s hourly rates will give clients a point of comparison to their own and other professional service providers—thereby setting up potential questions of worthiness.

I am interested in your reactions to this topic and perceptions about value pricing vs. hourly rates for creative and marketing services.