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Michael MonahanPublic Relations

If Your PR Firm Still Charges You an Hourly Rate, You’re Probably Paying Too Much

By March 27, 2017 August 29th, 2019 No Comments

Having been in your shoes on the corporate side, I know how unnerving it can be to receive an invoice from your PR agency revealing it took longer to achieve the desired result than you thought it should.

Why should you pay more for the agency to write a press release, simply because it took them 10 hours to write, edit and muster it through the approval process, when your experience suggests it should have only taken eight? With some agencies billing upward of $400 per hour for senior talent, the incremental hours can result in incremental fees – fast!

So why would you tolerate a model that allows your agency to charge you more because they’re less efficient?

You shouldn’t.

Think of it this way. If you pay someone to mow your lawn, do you care about the activity (how long it took) or the result (a mowed lawn)? If you’re like me, you really only care about the result. Whether your service uses a riding mower or a walk-behind is their decision to make based on their own business model, not yours.

Uber does this to great effect. A few years ago, I remember sitting in the back of a yellow taxi in New York, headed from JFK Airport to Manhattan, anxiously watching my meter creep toward $50. Uber solved that problem with up-front pricing, telling you in advance exactly how much you can expect to pay for your fare.

Flat-rate billing can also increase the transparency of the work your agency performs for you. Ask your agency for a quarterly, or even monthly, scope of work that details the kind of work they will perform for you and the results they expect to achieve. This creates a bucket of hours available to them to manage and incentivizes the agency to work as efficiently as possible.

If your PR firm achieves the desired result in less time, they can move on to other projects on your account, leading to a happier client (you), or they can move on to other business, leading to a more profitable agency (them). More likely, the result will be a combination of the two.

Occasionally, either you or the agency will realize that your needs may require additional hours beyond what you have in your budget. A flat-rate model allows you to have a conversation about how you manage that bucket of hours. Is there flexibility in pulling hours from a future month, for example? Or do you need to scope out that work as a separate project? A good PR agency account manager will present a couple of different options to you and give you the opportunity to make a decision based on your business needs.

Further, this pricing model allows you to better forecast your spending across the year.

At Tech Image, for example, our clients know that other than certain out-of-pocket expenses, such as travel expenses or wire fees, they can expect their invoices to remain consistent over time. There is no running meter. This allows for a seamless approval process and simplifies things when budgeting season comes around. Everyone knows what to expect, and there are no complicated formulas needed to account for the highs and lows that the variability of your work inevitably produces over the year. If you’ve agreed to a $20,000 per month retainer with a finite set of deliverables tied to it, guess what: You can expect your invoice for professional service fees to be, you guessed it, $20,000.

Finally, flat-rate pricing has the effect of producing a blended hourly rate across all the various staff levels the agency might have working on your account. In the example above, you’d pay significantly more for the incremental two hours the agency spent on your press release if your account manager decided to have a senior team member review that press release instead of a more junior specialist. Their decision just cost you $800 in additional fees (or more!).

By establishing flat-rate pricing with your agency, you reap benefits in the form of efficiency and transparency, and land on the simplest way to manage the financial arrangements between your corporate marketing or PR department and your agency of record.

Michael Monahan

Author Michael Monahan

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