Why should you pay more for the agency to write a press release, simply because it took staffers 10 hours to write, edit and muster it through the approval process, when your experience says it should have taken only eight? With some agencies billing upward of $400 per hour for senior talent, the incremental hours can result in exorbitant fees—and fast.
Why should you tolerate a pricing model that allows your agency to charge you more because of its inefficiency?
Mowers and meters
If you pay someone to mow your lawn, do you care about the activity (how long it took) or the result (a mowed lawn)? 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 was sitting in the back of a taxi in New York, headed from JFK Airport to Manhattan, anxiously watching my meter creep toward $50. Uber solved that problem with upfront 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 it will perform for you and the expected results. This creates a bucket of hours available to its staff to manage and motivates the agency to work efficiently.
[RELATED: Find out how to make meaningful connections with your customers and journalists at the Practical PR Summit.]
If your PR firm achieves the desired result in less time, it can move on to other projects on your account, leading to a happier client, or it can move on to other business, leading to a more profitable agency. More likely, the result will be a combination of the two.
Flexibility is still available
Occasionally, either you or the agency will realize that your needs might require additional hours beyond what’s in your budget.
A flat-rate model prompts conversation about how you’ll manage that bucket of hours. Is there flexibility in pulling hours from a future month, for example? Should you break out that work as a separate project? A good agency account manager will offer a few options. Further, this pricing model helps you predict your PR spending for the year.
Finally, flat-rate pricing produces a blended hourly rate across all the various staff levels the agency might have working on your account.
By establishing flat-rate pricing, you reap the benefits of efficiency and transparency. You also land on the simplest way to manage the financial arrangements between your corporate marketing or PR department and your agency of record.
Michael A. Monahan is the vice president of Tech Image. A version of this article originally appeared on the agency’s blog.(Image via)
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