The cost of underpricing goes way beyond the margin
The client has a fixed budget. Let’s say £100k.
Strategy, creative and channel planning happen properly. The team has thought carefully about what’s actually needed to hit the objective, and the scope takes shape. But it lands north of the £100K budget.
At that point, many agencies start negotiating with themselves, even before the client does. Well-intentioned client service teams want the scope to feel robust and to be beyond reproach. The line items get squeezed, hours reduced, but the deliverables stay in.
The proposal stops reflecting what the project requires and starts looking like what feels commercially acceptable. That’s where the chain reaction starts.
Downstream, this leads to teams feeling crunched. Creative and strategy colleagues have to rush through projects, cut corners and lose the chance to deliver their best work. Traffic feels the pressure and over-servicing becomes normalised. And even Senior people get pulled back in to steady things.
We’re making a rod for our own backs.
Clients then start to see deliverables as line items with a fixed cost, rather than valuing the strategic thinking and effort behind them. It’s a race to the bottom that’s hard to reverse. (And don’t even get me started on AI!)
Of course, clients are under pressure too. Budgets are tighter. Procurement scrutiny is higher. The issue is that expectations haven’t necessarily reduced in line with spend.
From my experience, good looks more like:
Starting as you mean to go on. Leave the negotiations till later.
Pricing for value, not for volume. “Less but better” trumps “more for less”.
Buying your colleagues the time to do their best work.
Proper commercial discipline from the get-go protects us all. It protects the margin, the quality of the work, the team's confidence, and ultimately the agency's reputation.
