The Scoop Regarding Marketing Agency Pricing Models

There are a plethora of tools out there that help digital marketing agencies deliver more in less time – all with better results for their clients. When it comes to pricing, agencies usually utilize project or retainer models (or some combination of both), and often times retainers are preferred due to their broader scope, more prominent involvement, steady income and assistance with budgeting. As it’s often said in the marketing business – come for the project, stay for the retainer services.

Let’s take a closer look at this phenomenon…

Remember that iconic line in Jerry Maguire when Cuba Gooding Jr.’s character blurts out “SHOW ME THE MONEY”? Well, in the PR world of words, someone has to take care of the numbers, too. In the entire history of marketing agencies, we’ve seen a myriad of variety with regard to charging clients – retainers, hourly rates, project-based fees, payment-by-results and even a la carte pricing. While they all come with advantages and disadvantages – like everything else in life – it’s the retainer model that agencies continue to covet.

Why do most agencies prefer to charge retainers? Retainers are basically a fixed monthly or quarterly fee charged for a contractual commitment of, usually, six months; most of the time, this is paid in advance. This approach ensures clients of a certain level of services during the contractual period, and the calculation of time that’s put into a client’s marketing activities is based on a simple formula: Hourly rates multiplied with estimated time taken to deliver the agreed-upon services.

At times, the hours worked on a client’s project will end up being higher than estimated, but it normally balances with times when there is less to do around the particular account. Overall, it must be stressed that retainers ensure some measure of stability for the agency, which can then cater to longer-term goals and cover day-to-day activities. What’s more, retainers are usually preferred by clients that trust the agency and see value in long-term marketing initiatives.

Boutique marketing agencies generally charge the lowest retainers, believe it or not, with figures somewhere around the $2,000 to $5,000 range in the U.S.; retainer fees as charged by startup agencies tend to run between $5,000 and $10,000 while the top dogs in the marketing world command in excess of $20,000 per month for retainer fees (again, in general; these rates, of course, fluctuate depending on industry, time of year, area of the country, etc.).

Here’s what you need to take from all this: There are thousands of marketing agencies worldwide that fight the competition for clients’ budgets, and it’s performance and reputation that greatly influences the “stretch” service fees can have…all while efficiency remains the greatest contributor for profitability. Isn’t it time you began looking at YOUR agency’s efficiency?

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