Ark JWT Kyiv, 1998
29 years ago, I embarked on my advertising career. Agencies' income stemmed from commissions on media budgets. Nobody purchased our creative and intellectual output; we gave it away for free. My client Ferrero would say, "Just adapt our Italian ad, and that's it."
Oddly enough, clients' desire to save money helped. I discovered the "Cost-plus" method, where agencies reveal the team's salaries, overhead costs, and profit to the client. This approach helped us win a crucial pitch during the 1998 crisis.
We applied this method to all clients. Now, each specialist had a price, hence value. The agency gained stability. Sadly, international clients still saw us merely as executors. Our creative potential hardly interested them.
In 2001, I became CEO and launched a series of experiments. We shifted our focus to local clients. Ironically, their potential didn't interest any major agencies. Except us. That's how the country learned about brands like Fozzi, Selpo, Morshynska, Roshen, Myagkov, and others.
It turned out that the only thing these clients cared about was our ability to skyrocket their sales by launching a vibrant brand. And we excelled at it. Realizing this, I proposed a new pricing method to the most ambitious clients.
"Payment by results" resonated with them. Being entrepreneurs, they were willing to share success. In a short time, local clients became our biggest earners. But beyond the rewards, the work brought us joy, creative fulfillment, market recognition, and most importantly, meaning.
Since then, I've learned even more about various pricing models. This subject fascinates me. If you tangibly solve client problems, sticking to old pricing means leaving value on the table.
Reflecting on this evolution, I draw these conclusions:
The market defines you, but it evolves. Change with it.
There are always those who direly need your contribution.
When you create colossal value together, it's easy to share.
No one will make you rich; you must offer a lucrative deal.
It's only possible if you highly value your craft.
Sincerely yours,
-Alexander
About me:
As a business therapist, I help tech founders quickly solve dilemmas at the intersection of business and personality, and boost company value as a result.
How can I help you?
If you've long been trying to understand what is limiting you and/or your business and how to finally give important changes a push, then The Catalyst Session is designed specifically for you. Book it here.