A paid discovery phase can be a valuable tool to identify problems before they start, communicate value to your client, and properly scope a project. And because the deliverables in a discovery project are much simpler than in production, you can often start a discovery project with a much simpler agreement.

To understand the benefits of discovery, imagine remodeling your bathroom. The contractor shows up and says a project like this is typically around $30,000. Based on this, you sign the contract and get started.

But not long into the project, your contractor comes to you with bad news. A leak was discovered beneath the shower pan that has led to significant rot in the subfloor. The rotting joists will all need to be replaced. In addition, the wall you wanted to replace with European glass is actually load-bearing, and can’t be easily removed without installing a massive header beam. 

The contractor tells you a change order will be required to address these two items at a significant increase to the project’s cost and timeline. Being part way into the project, you feel like you can’t turn back. So you grit your teeth and sign the change order, knowing you’ll have to scrap that planned vacation to pay for the extra work. While you understand that the rot and wall issue were hidden conditions, you are frustrated that your contractor didn’t do something before the project started to assess existing conditions. And while you like the finished product, the surprise change order and unexpected extra expense leave you feeling dissatisfied with the whole endeavor.

What is Paid Discovery?

Most clients don’t know what they want when they look to hire a creative agency. They might have a broad concept (like building a new website) but they will not have a good idea of the goals they want to accomplish, what features they need, or what obstacles might be in the way. And they almost certainly don’t know about what problems might crop up once the project begins.

Faced with this reality, an Agency has two options when engaging a new Client. 

The first choice is to dive in and hope for the best. You pitch the project based on the information provided by the client (even though the client may not have a solid understanding of what they need). Because you don’t know about hidden problems or the client’s true needs, you can’t give a solid price. 

You end up pricing hourly or against an estimate (vs. a value-driven fixed fee). The project is highly prone to profitability destroying scope creep and surprises that drive client frustration and dissatisfaction. But most of all, if a client doesn’t have a good understanding of what they need, they won’t recognize or appreciate the value your Agency is providing to solve their problem.

The second choice is paid discovery. Discovery is a limited-scope, paid project that is used to learn more about your client and their project, uncover hidden challenges, and help sell the much-larger production project.

Legal and Creative Benefits of Discovery

By uncovering potential problems before you start, you can help a client adjust budget and schedule expectations. Discovery also presents an opportunity to better understand a client’s needs so you can pitch the work they actually need (as opposed to the work they think they need). 

From a legal perspective, the value of discovery is in identifying and removing potential snags in advance. Surprises are one of the biggest sources of client frustrations and disputes. Identifying potential surprises in advance is a critical step to avoiding potential disputes. While Discovery may reveal some bad news, it does so at the best time. Before the project starts. And if the bad news uncovered by discovery leads to the project not going forward, be thankful you learned about it before you had a significant account receivable from the client. 

Some Clients initially object to Discovery thinking they don’t have the money for it. Or that it will increase the overall cost of the job. But in reality, the cost of Discovery is more than offset by the certainty it helps bring to a project, and your Agency should sell Discovery this way. Like the bathroom remodel, Discovery helps identify (and solve) problems before they arise. 

How is a Discovery Letter Different from an MSA?

Typically, the deliverables in a discovery project are just a pitch deck for the production phase of the project. As a result, the contract needs at the discovery phase are much simpler than in production in a number of ways. A good discovery agreement contains the following:

  1. Fees and Schedule. Fees should be paid in advance. The schedule is an estimate.
  2. Cooperation. The client is required to cooperate with the discovery process by making staff and services available.
  3. Termination. The client should be able to terminate at any time, but the fee isn’t refundable. 
  4. Intellectual Property. The client is free to use the discovery deliverables internally or even with another agency. 
  5. Other Terms. The discovery letter should make clear that if the client engages your agency for the full project, that they will be required to sign your full MSA and a detailed SOW describing the work.

Download this template discovery letter to efficiently kick-off discovery so you can pitch your projects with a solid understanding of what your client needs and what challenges the project might present.