If clients knew the amount of hard work, dedication and time that it takes to secure a fashion placement, I am convinced they would all instantly double our retainers. One of the main difficulties a PR professional can have when deciding to start their own agency or go it alone as a freelancer is developing a pricing structure that is competitive in the market place and compensates you fairly for your time. There are two basic ways to charge for PR related services, hourly and retainer based fees.
One of the main difficulties a PR professional can have when deciding to start their own agency or go it alone as a freelancer is developing a pricing structure that is competitive in the market place and compensates you fairly for your time.
Either method really requires you to get a handle on ALL of the expenses you incur to run your agency. We keep a detailed spreadsheet that lists all service fees, rent, average monthly costs for office supplies, subscriptions, salary expenses, etc. Yearly fees are annualized so that we can determine the average monthly fee for that service. We add up all of those monthly costs and divide it by 160, which the average number of work hours in a month assuming a 40 hour workweek. The resulting amount is the amount that needs to be added to what ever figure you wish to charge for your services. For example, if your monthly expenses are $2000/month, you would divide that by 160 and get $12.50. If you want to earn $100 per hour you need to charge $112.50 to earn $100 per hour.
You can choose to bill clients hourly
The first basic method of charging for service is to bill the client hourly. Most of our large corporate clients prefer to be billed hourly so there is flexibility as their needs and bandwidth changes. For example, we had a large corporate client that initially retained us to develop the concept and plan a major consumer event activation and they intended to have their team execute it. However, the found themselves pressed for time and had our team handle certain aspects of the execution of the event plan. When developing an hourly billing rate, here are key things to consider:
- You will have to track and manage your time accurately. We bill in .10 or 6-minute increments. Use time tracking software to ensure accurate billing. We use Slim Timer.
- Your billing statements should give adequate descriptions of how time is spent. It should list the activity and its purpose. This will prevent your billing statements from being challenged by the client. For example: Researched online and via media database tool in order to develop media list for store opening outreach.
- When determining your hourly rate, it is important to account for your fixed and variable expenses such as rent, media monitoring and database services, staffing costs, etc.
You can choose to bill clients through retainers
The alternate way to bill clients is via a monthly retainer. A monthly retainer is a fixed amount to be paid by the client to the PR firm each month for pre-set parameters of activity. It is important to list clearly in your agreement in the client what activity will be covered under the monthly retainer. When developing a monthly retainer, here are key things to consider:
- Estimate how much time it will take you to complete the activities that are required by the monthly retainer and multiply that by your hourly rate to determine what the monthly retainer should be.
- Tracking your time on retainer clients can be invaluable in monitoring the profitability of each client.
- It is important to ensure that monthly retainers are competitive in the marketplace and create value for the consumer, so some discounting for monthly retainer clients is reasonable. You are receiving the benefit of stable accounts receivable from that client each month and it is reasonable for the client to expect a discount compared to an hourly billing structure.
Often PR practitioners are considered that they are pricing themselves out of the market and offer discounted rates based on what they feel competitors are charging. However, it is a better practice to really determine your worth on an hourly basis and work from there. This method actually allows you flexibility in terms of being able to offer clients with smaller budgets services but with a more tailored plan that requires less hours. The most important part of developing your pricing structure is to determine your worth on an hourly basis. Some factors to consider when determining your hourly rate include years of experience, average frequency of press placements for clients, quality of press placements secured for clients and strength of your connections in the industry.
The most important part of developing your pricing structure is to determine your worth on an hourly basis.
PR is a competitive industry and budgets have become increasingly smaller over the last few years, but by developing a methodical method to determine your hourly rate, you can ensure that you develop a pricing structure to meet the demands and budgetary constraints of any client.
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