Which would you prefer? A cost estimate? Or a value estimate?

Recently, a client asked us to review series of cost estimates to help establish whether the rates and calculations were in-line with industry benchmarks. 

While it’s a familiar request – many clients ask for a reference point when spot-checking costs – it’s also an indication the client has concerns around the cost basis and the real or perceived value associated with the estimate.

And that got us thinking about redefining expectations around cost estimates so that value calculation could become as transparent as the cost. 

So why not start asking for a ‘value estimate’ instead of a cost estimate?  In our view, it’s a win-win for both the marketer and the agency – the marketer knows what they’re really getting for their money and the agency stands a much better chance of selling whatever it is they’re proposing. 

Here are a few thought starters:


Marketers would be able to get a transparent view of what something really costs because the agency would be basing their value calculation on these costs.  If the cost is too high – the value calculation gets called into question – not thrown out.


As agencies are placing a value figure on the proposals they’re putting forward, there would likely be greater scrutiny on the development of the estimates before they get sent.  In theory, marketers could measure agency performance against the ability to deliver the value outlined in the value estimate.


Costs and performance against specific projects would also become more measurable because there’s are now value equations built right into the estimates. 

ROI on total cost

Because there’s now a window of transparency into costs being put forward, marketers will also have the formulae necessary to calculate the ROI – not just on the value estimate that’s in front of them, but all the value estimates provided over a period of time. 

Better results

My guess is results would be better too – perhaps not as much of a stretch as you might think. 

If the agency providing the estimate has really stepped up and provided a value estimate that they’ll be measured against – or held accountable to – it’s likely that the agency is going to put deeper thought into the value estimates they put forward to ensure they do indeed deliver on the value they propose.

The big caveat here is that lowest cost does not equal to greatest value and not everything can necessarily be neatly bundled into a value estimate.  But if marketers mandated every cost estimate above say, $100,000 be re-written and re-presented as a ‘value estimate’ – wouldn’t that make for a new and highly effective way of calculating estimates before they hit your desktop?

Personally, I’d rather have ‘value estimates’ hitting my desk than cost estimates. What about you?


Stephan Argent is Founder and Principal at Listenmore Inc  offering confidential advisory to marketers looking for truly independent insight and advice they can’t find anywhere else. Read more like this on our blog Marketing Unscrewed / follow me @StephanArgent

Photo: rawdonfox

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