Project Pricing vs Hourly Pricing for a Branding Agency
Which Pay Structure Works Best for a Branding Agency and Why
Choosing a branding agency means putting a lot of faith in a group of people you may not know. In many ways, it’s a lot like handing your kid off to complete strangers and hoping they will care as much for their well being as you do. It’s a tough decision for sure and on top of that, you need to make sure you are getting your money’s worth.
Unfortunately the creative process can be hard to quantify, particularly when dealing with agencies that go beyond just making things look good. For them, it involves the incorporation of strategic planning that targets your desired audience. For the record, we recommend finding the ones that do.
When it comes to Branding agencies, most typically charge in one of three ways:
- Project based – where the goal of the project is laid out and a fixed price is given.
- Hourly based – where the goal of the project is laid out with an estimate of hours it could take to complete.
- Retainer based – where a set number of hours are allocated (generally on a monthly/quarterly basis) at an agreed upon fee.
Prospective clients should know up front that there really is no way to know how long the creative process will really take to complete. Now, that doesn’t mean a deadline won’t be met—but it can mean hours of work might be tossed out when a new and better idea emerges. Hours spent on one project could be pushed aside after new details emerge. In other words, being charged by the hour could mean unforeseen expenses charged to the client.
These unforeseen expenses could be worth every penny, but it’s hard to set a budget when the end result depends on so many moving parts.
Project based fees, on the other hand, make room for midnight sparks of creative genius. Let’s look at some of the other reasons this rate structure works for most branding agency clients.
Project Based Rates: Why It Works
- Peace of Mind Factor: You can set a budget and you will know exactly what you will be paying. Obviously unexpected things can crop up, but on this fee structure makes hidden expenses are accounted for.
For example: Many agencies that charge hourly rates charge for phone calls, emails, and meetings that will come up as the goal is met. Some may even charge you for just thinking of your project at dinner one night.
With project based fees, those elements will be included in the price. So, while the initial estimate may seem higher than an agency that charges by the hour—the total bill will probably be lower with a project-based structure.
Peace of mind plays a large part in a project this close to your heart and check book.
- Time Factor: You have protection if the branding agency misses their deadline. If the agency underestimated the work, you will not pay the price. Plus, deadlines can be in flux from the get go because new information is constantly reemerging.
- Incentive Factor: The branding agency you choose has incentives to get the work done at or before deadline. The more time they take, the more money they lose.
The reason project-based rates work for the client are also pluses for the branding agency. Everyone knows what to expect from the get go. This pricing strategy is upfront and direct.
Retainer Rates: Why It Works As Well
Another factor to consider is putting your branding agency on retainer. A retainer is a fixed monthly (or quarterly) fee that ensures your needs will be handled, regardless of what comes up. This is another way to make sure your budget does not take an unexpected hit and gives the management of your brand stability. A retainer lets the branding agency work towards long term goals and cover day to day needs.
The creative process at a branding agency is done by professionals who have to create every day– on demand. They know how to get going and brainstorm ideas, but the entire process is still hard to quantify hourly. Sometimes the best ideas arise in the car, in bed, or in the shower!
Project based fees take the pressure off both client and agency—to make sure the best work put forward, with no billing surprises.
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