If you are in the market to hire outside help for your PR and marketing efforts, eventually you are going to have to have a discussion about money ─ how much will your efforts cost and how does your chosen vendor want to be paid.
When establishing a relationship with a new vendor, it is important to figure out early on if paying by the hour, by the project or on a monthly retainer makes the most sense for you. This determination involves a lot of conversation between you and your vendor to define the scope-of-work, which in turn will determine the right billing approach for your specific needs.
What Goes into a Project Estimate?
Several factors need to be considered when developing an estimate for a marketing project, including what is the deliverable, what is the due date, will there be hard costs and so on. Think about when you take your car to get detailed, and the station manager hands you a rate card of the different options available and tells you that the cost is based on the end result you want. But for that station manager, the price of those services reflects how much time it will take, what products will be used and how many crew members will be needed to complete the work.
Pricing for marketing services is much the same way — how much time will it take to do the work? Does your vendor have access to the equipment needed to get the job done? Will there be additional vendors involved in the process? Will you be paying each vendor separately, or would you preferred to receive one invoice from your chosen vendor? All of these questions (and many more!) should be discussed to develop the most accurate estimate for a marketing project.
Because marketing is a service-based business, outside marketing consultants, like us, have set rates — a flat fee charged by the hour — based on how much we believe the fair market value is for our expertise and skills within the niche industries we serve. With this rate as the foundation for our project estimate, we then work with clients to determine what billing method makes the most sense for their unique needs: By the hour, by the project or on retainer.
Billing by the Hour
The main advantage of hourly billing is that it is simple for you (the client): We work 10 hours, and you get billed for 10 hours. It’s also an easy way for us to start working with a new client who may not yet be ready to commit to an on-going relationship.
The drawback of type of relationship is that there is no commitment from you for additional work or from us for a priority relationship. For us it also means that once the estimated hours of the project are reached, we move on to other client work.
Billing by the Project
When working on a project rate basis, we estimate a fixed amount of money for the entire project (including all the variables, such as deadlines, outsourcing and so on) to be completed in a predetermined period of time. This scenario is often referred to as "work for hire" and is common to use this model on larger projects that have a defined start and end date.
The advantage for you and for us is that the scope of the project, and the price, is set before work begins. This allows both parties to better manage the bottom line, as well as secures an on-going relationship (with priority access to our team), for the duration of the project.
The drawback of this type of relationship is that if the scope of work for the project changes, it has to be documented so that the estimate can be revised and agreed upon by both parties to complete the work. If this does not happen, one or both parties may be inconvenienced and end up unhappy with the final result of the project.
Billing on a Retainer
Working on a retainer basis allows you to set a budget, or fee, with an agreement that we will be available to work on your projects for an agreed-on number of hours each month (based on how much time we need monthly to complete the scope-of-work), and that you will have priority access to our skills and expertise.
To make sure our clients understand the value of retainer billing, we help them set budgets, based on what they want to accomplish, and allocate a certain number of hours per month against that dollar amount. Then we track and report our hours each month to make sure that not only are we staying on target with the scope of work but also to constantly evaluate that the relationship is a win-win for both parties.
So, if you are considering working with a PR and marketing consultant or agency, remember it's a service business — you have to give your vendor something to do and pay them fairly to do it. The best advice we can give you is to find a team that you like, trust and want to work with, and you see the value in that decision.