The subject of a post Mike Manuel had some time ago — and my comment on it — has been rolling around in my head fairly regularly since then. (Yeah, I know. I already trackedback, or is it trackbacked? to it. Mike has another good post, though his has been more focused on billing for social media services, not in general terms.)
I’ve only worked for one agency, but I believe the typical way agencies bill their clients is that the hourly rate is based on the person (and his/her position and experience) doing the work.
Since we can, or should be able to peform an array of functions, shouldn’t agencies bill clients based on function, rather than by the person doing the work?
I understand the rationale of billing by person: The more experience account people have higher rates because, the belief is, they provide higher quality and even more efficient work, plus are better experienced to implement the strategic know-how behind the project. (Plus, they get the higher salaries.)
And, vice versa for “junior” or less experience account personnel: Essentially, clients pay for the learning curve, so the hourly rate is less.
To ensure clients receive a fair price and can determine value in the service, I have two suggestions:
First ,charge clients by function, rather than by the person. Institute a three-tiered hourly rate system based on function. For example:
Bottom-level hourly rate for basics like: media list and other research, reports (such as contact and campaign/billing reports), travel, some client meetings/contact, contact/negotiating with vendors, etc.
A mid-range rate for more service-oriented work, but work that still requires a level of skill: copy writing and revisions, media contact, event organization, project management/coordination, etc.
Top-level/prime hourly rate for the strategic and similar services of value unique to the agency: strategic counseling and plan development, planning meetings with clients (and similar “high-level” meetings), etc.
These and other services agencies provide would be based on the value and benefits to clients, rather than on the person providing the service — since we often provide all levels of client service.
Now, for the second part. If you don’t already do it, make it a priority to report on the results of a campaign — it’s easy if goals and measureables are included in an annual or project plan.
For me, reports and other “administrative” work is the most difficult. I’d rather be doing the fun stuff — the work. But, reporting the results are important to ensure clients are happy or at least can see the value (or lack of?) that agencies provide for the revenue they receive.
Being better at providing these reports is my second-half-of-the-New-Year’s resolution for work. Do a better job of justifying my employment and my employer to clients by reporting the results of my work for their money. I already do this to a certain degree, but should be more consistent.
In media relations, let clients know the clips and the audiences they are reaching in the media. Let them know any traffic generated to a Web site due to a direct mail or advertising series. Ask for sales or other key figures from clients over the life of the campaign. Show what impact you are actually making for clients.
When you really look at the client-agency relationship, we are nothing more than a vendor. An outside cost. So, it is up to us — not clients — to justify the money clients spend on us. Otherwise, clients can easily go elsewhere for the service we provide.
We just have to ensure they know what that service is, and how valuable it really is.
– Mike
Technorati tags: client-agency relationship, billing, PR, public relations
