How do agencies decide how much to bill clients? How much is their retention usually?

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Most clients will tell you all agencies bill too high. It’s why they’re bringing things in-house or ditching the AOR/retainer model all together.

For retained relationships, most agencies have a standard rate they bill per title. Right now, they bill just barely enough to make profit.

For project clients, it’s usually a flat fee they decide on pretty unscientifically, like a freelancer would. (“We’ll be spending two months on this, how much will we need to keep the lights on?”)

Running an agency won’t make you rich. The overhead (our salaries, office rent, etc) is so insanely expensive.

Selling an agency is what makes people rich.

likeupliftingsmarthelpful

I’m curious about this too. My agency bills by the hour. It seems so antiquated and they are running into the problem as to where they don’t know if their prices are too high (since they’re not winning business) or if they’re billing too low (because they see large amounts of time spent on projects they billed too little for). Then again, they expect you to rebrand a company and present four different logo ideas in 4 hours. 🙄

funny

👆that’s for creative agencies. No idea about media agencies/digital/pr agencies/or production shops. Creative agencies have a thicker stream of income if they do their client’s media buying and/or production in-house though.

helpful

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