Question

Topic: Advertising/PR

Agency Fees & New Accounts

Posted by Anonymous on 5/12/2008 at 9:26 AM ET 125 Points
I was considering putting together a "rate card" for our Ad/PR agency so that we could sort of have an a la carte menu for our clients. I can't seem to find any other agencies that do this - supposedly most hold this information confidential since every account is different. I am having trouble figuring out what to bill our clients for and they often ask how much does a a full page ad design cost, how much does this cost? I want to break it down for them while including profit.

Also, we just brought on a new PR Director that is bringing over some pretty hefty accounts and I want to be able to break down our fee structure in some way. They want a letter stating who we are as an Agency and what our policies are. Historically we do project fee or retainer based on the scope of work. Is it bad to do a rate card? Shall I have my account people track their hours? We have gone from really small to quite big in the matter of months so I need to be prepared and able to speak intelligently about our billing process. Agencies don't seem to list their rates. Any suggestions?
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RESPONSES

  • Posted on 5/12/2008 at 2:49 PM Accepted
    The reason most agencies don't list their rates is really because even a "simple" project can be anything but simple. Even the standard collateral pieces like brochures vary so much, it would be difficult to state a firm price that doesn't put you at risk. For example, it's one thing to work from copy a client has already created and approved. It's another to have multiple meetings, spend hours on research and create many different copy treatments before reaching agreement. An hourly rate protects you from indecisive clients.

    That being said, there's nothing wrong with giving a range based on your experience, with the caveat that it includes X number of revisions, X hours of research and X meetings as a baseline. That still gives you wiggle room if they are indecisive, but gives them reassurance and a way to budget. (You do owe them some kind of estimate.) If you've got enough experience to be pretty certain of your range, you can even commit that the final price won't go above or below the stated range. That protects both of you.

    Posting prices makes it easier for competitors to underbid you, without recourse for you. Project fee and retainer pricing is still the norm that I've seen. It does mean tracking hours, or quoting a flat project fee range that you've ultimately calculated based at some point on estimated hours. Your hourly rate should include overhead plus profit margin. (The people I've seen most recently that quote a flat fee are internet graphic designers who work from template programs within narrow parameters, such as ebook covers.)

    What you can quote in a proposal are the hourly rates for different specialties. So you could say that graphic design is X per hour and copywriting is X per hour, etc. You can also state how you charge for meetings that involve several staffers (straight time or blended rate). I'd still recommend for competitive reasons that these rates be in the proposal, not on your web site or in a handout. Realize that no matter what you do, your competitors will eventually find out how you charge, so customer service is the key to retention.


  • Posted by Levon on 5/12/2008 at 4:28 PM Member
    Usually an agency quotes on per job per basis -- a quote / proposal is often drafted and presented before hand. Some design and print and media companies work on an hourly basis, generally starting out at $84 per hour.
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