Money Talk: Fee Structures for Creative Consultants

By Elke Giba posted 05-07-2019 11:30

  

I've heard this question several times lately: "How should A/E/C firms engage marketing consultants?" Apparently, it's a common question that isn't addressed often enough — especially between the two parties who directly benefit the most from working together; your firm and the creative consultant. Fumbling the money conversation brings unnecessary baggage into a transactional business relationship before the project even starts. It doesn't have to be that way.

Start the engagement off on the right foot. Minimize the conflict around the fee ahead of time and leave plenty of room for collaboration, exploration and significantly higher satisfaction.

Paying for Creative Work: Flat Fees, Retainer, or Hourly Rates?


Audits, surveys, and discovery services are typically priced as a flat fee based on the amount of information, research and study required. More complex marketing and positioning problems may require more complex strategy and tactical solutions, which will correspond to the final fee. Your firm is paying for insight and knowledge with these services, not just a deliverable (like a printed brochure or website). There is tangible value delivered to your firm in the actionable insight and it is priced accordingly.

Flat rates are also appropriate on singular deliverables like brochures, websites, and case studies. Creative initiatives for company logos and brand identities are uniquely crafted for each firm, and so they are priced are according to your need. I'm wary of package pricing options for identities as you may not get everything you need. Projects can vary widely from firm to firm but creative agencies can help your firm evaluate the budget required by supplying a price range instead of package price before a proposal is even created.

Retainer contracts are another option to consider when engaging a creative firm or consultant, but they aren't perfect arrangements. It is easier to budget the expense over the length of the engagement, but there is a risk that one party may become disenchanted before the contract ends. For instance, I heard a firm say that they were slowly becoming dissatisfied with their current content consultants because of the ongoing, escalating cost without any perceived increase in the value of the work. The amount invoiced for that particular month had exceeded the firm's level of satisfaction at that particular moment, causing them question what they were paying for in the first place, even to the point of reaching out to other creative firms for alternative solutions. It's a risky to let relationships erode over billing arrangements.

If you want to use a retainer agreement on longer engagements to create content marketing or thought leadership programs, be clear about the goals that should be met, and include a predetermined end-date that satisfies both parties. Consider regular evaluation milestones that aren't tied to deliverable due dates or a payment to discuss the real value in continuing the engagement for both parties.

Stay away from hourly rates

I do not recommend engagements based on an hourly rate model. A/E/C firms can get frustrated with exploding invoices when scope creep is a factor, and project delays can snowball into additional hours or even rush fees. The other issue with hourly rates is that consultants and creatives are limited from doing their best work when they are on the clock. More experienced consultants don't require as much time to complete a project and consequently may not be compensated enough to do their best work for your firm. The opposite is also true that less expensive hourly rates may mean the work could take actually take longer to be completed correctly.

True, flat rates bring some risk for both your firm (in paying too much) and the creative agency (in not getting paid enough). Use flat rates to set a benchmark for how much your firm values the outside assistance, and how much value consultants and agencies bring to your firm's business. That clarity can help both parties find the right fit.

From here, the conversation generally moves into other financial and operational questions on engaging a creative firm. It seems like the right place to include a few notes on those questions here.

When should I engage outside marketing support and creative services?

There are a couple of reasons now may be the right time for your firm to enlist the support of a creative firm. Here are just a few and I’m sure there are others.

  • Temporarily extend the capacity of your team during personnel changes or an extended leave. This is a no-brainer. Don’t kill your internal team with extra work when there are incredibly talented and capable creatives ready to help you out. They understand stepping into work midstream and can accomplish more in a short time frame than your team can manage with a double workload.
  • Impartial, unbiased perspective into your processes and potential content. External marketing professionals are in a unique position to make additional observations about the way you market your firm, which holds tremendous value. They may be able to share productivity tips and reduce redundant operations if you’re open to the opportunity.
  • Bring in a specialized skill or expertise not currently available on the internal team. If you have a team of one in your marketing department, it is unlikely that they are the best choice to complete every marketing need for your A/E/C firm. I’m sure they are very good in many different aspects of their role. But the likelihood that they are an expert web developer AND technical writer is low. Find an expert to help your firm with better results on a shorter timeline.

How much should a firm invest in marketing activities?

There are many factors involved in determining a budget including risk tolerance and goals, but 7% - 10% of a firm's annual gross revenue is a good place to start for a marketing budget. High-growth models and expansion into new, highly-competitive markets could require marketing programs that exceed that 10% budget mark. Firm leadership should set the budget based on how comfortable they are with risk, and how quickly they want to grow. If your firm is challenged to fund a marketing budget, you may not be ready yet to engage a creative agency.

How do you calculate Return on Investment for a marketing program?

I don't. There are too many factors that can impact the overall success rate of a marketing program to confidently establish a standard benchmark on marketing budgets. For instance, your marketing message could be perfectly crafted to reach your target audience in all the right channels, but then new leads aren't properly managed internally, or poor project performance delivers the opposite message to clients. No amount of marketing can overcome the obstacles created due to crappy operations. There are ways you can measure if your marketing spend is effective, but there isn't a set standard to measure against. If your firm is distracted by calculating ROI, I do not recommend hiring an outside creative firm.

Independent creative agencies and consultants have gathered an incredible amount of experience working with a variety of A/E/C firms. You benefit from the value they bring. When pricing is discussed with transparency and clarity, A/E/C firms and agencies can start new projects with clearer expectations and increased project satisfaction.
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