The other day I went to the pharmacy and bought some replacement heads for an electric toothbrush. This was the first time I’d bought them myself, and they seemed a little pricey, so I went with the generic store brand. A few days later I thought to look them up on Amazon. They were so much cheaper! All of them, both the name brand and generic versions. This is an example of the power of anchoring.
When I went to the pharmacy, the store suggested a price (an anchor) which gave me a frame of reference for what was normal, even though I went with the lowest cost option they had. If I had looked up the prices online first, I would have had a different anchor, and thought the pharmacy prices were much too high. You can use the power of anchoring in your request for proposal by including a budget range.
I mentioned anchoring in my post “How do I save money on my AV bill?” but it’s pretty useful so I thought I’d expand. First I’ll talk about what typically happens, then how anchoring with a budget range can help.
In my experience a lot of people organizing events hesitate to give a budget because they think the number they give will be higher than the actual cost. They’re worried an unscrupulous supplier will mark up their prices and laugh all the way to the bank. In practice this rarely happens.
More commonly a client gives a list of needs to a partner, then the partner comes back with a proposal and the client is surprised by the cost. They have to have further discussions, revise the order and negotiate. Often the price is still higher than the client would like to pay.
There’s a couple reasons for this:
- There’s a lot of different levels of audio visual / event staging. Do you want the “Cadillac” of events or is a “Chevy” ok?
- Most companies are going to start by offering their list pricing with no discount.
- AV is usually more expensive than clients think. It takes professional equipment and a lot of skilled labor.
However if you list a budget range to start with you’ll get a few advantages:
- The partner will naturally compare the proposal they’re creating with your budget and try to match it. If they’re above your number they may include an equipment discount, multiple day discount or “comp” (offer for free) some items like cabling, carts, etc. They may have suggestions about more cost effective ways to achieve your goals.
- If they’re below your budget they may simply stay at a low price in order to beat competition. Or they may offer add-ons or enhanced options to consider.
- If a partner is completely unable to hit your number they may bow out entirely. That’s not a bad thing. It’s telling you that either the partner is not a good fit, or your budget may be unrealistic (which is entirely possible). It’s also saving you both time.
By including a budget range when discussing your event, you’re taking control of the negotiation before it starts, and helping create a more efficient process for everyone.