the great debate – outcome vs output

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As a service that specializes in PR for small and medium-sized business in a niche market, I’m often asked about guarantees and associated fees. After discussing this in more depth, prospective clients tell me about their past experiences of “being over charged with results that under deliver.”  Traditionally, the PR industry sells its value rather than its deliverables, charging a fixed fee. This is a hard medicine to swallow for small businesses struggling to make a name for themselves, and often far exceeds their budget.

Before my fellow PR friends come to me with guns-a-blazing, let me start by saying “I’m with ya on the concept of PR professionals providing value and being be paid their expertise and connections”, but what about the small or medium-sized business who have great stories to tell, don’t have the in-house capabilities or media contacts and can’t afford the traditional agency fees?  As PR consultants, should we not be flexible, meet in the middle and offer a package that comes to the party for both sides?

After doing much research, I find it interesting that the industry can’t seem to come to grasp with an economic reality that is facing so many – especially for small & medium sized business. What is wrong with charging a small “base fee” for the initial upfront work combined with a “success fee” tied to the communication effort?  Let’s look at other some other professions. Take lawyers for example.  Sure, they charge an upfront fee for consultation – but most offer clients the flexibility of options to pay by retainer or a percentage of the outcome.   Hmmm… outcome vs output – what a novel idea!   What about real estate and travel agents? They get paid by the outcome (sale or booking), not the output (the behind the scenes work to get the end result). They too, are offering high level expertise. We hire them for the knowledge and connections. Should their profession be discounted for their value because they work on a pay for performance business model? In these examples, there are no guarantees of result, all are taking risks and likely wouldn’t take your business unless they feel that they could deliver, (or at least one would hope).

This brings up another issue that has perplexed the PR industry – the intangibles. While PR efforts may not get immediate results, a genuine relationship is established with the media for a client that could eventually bear fruit. For example, a journalist may like the pitch, but can’t follow through on it right away. The benefit may come down the road in exposure and even more publicity from future media interviews – resulting in new business for the client.  PR firms would argue that they want to get paid for that opened door, but how can one charge for intangibles?  If we garnish that kind of long-term benefit for a client – haven’t we done our job?  Isn’t outcome where the real value is anyway?

I’m not suggesting it would be easy to define a business model that works and that there is a “one size that fits all” solution.  In fact, I have been exploring this concept for many of my small business clients – and believe me – it’s been no easy task.  But I do think that an alternative pricing model that defines “value with certainty” and focuses on tangible results will make PR accessible to a greater number of businesses.

What do you think?  As a small business owner, which pricing model would allow you to explore / expand your PR efforts?  And PR pros… which business model would you consider to help get clients into that space?[polldaddy poll=3456811]

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1 thought on “the great debate – outcome vs output

  1. “Value with certainty” is an option that works well for me as a PR consultant. Anyone who has retained a PR professional knows the extensive upfront work –research, positioning, copywriting and more — that goes into a campaign before the press pitching process begins. For there to be no compensation until a placement is attained is to undervalue this important process. In this difficult and challenging economy we must all be flexible in order to continue to maintain our business as well as our value to our clients.

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