I was interested to read a June 1 article in PRWeek that was a debate between Steve Cody, the founder of Peppercom (and someone I got to cycle with in Palm Springs a couple of weeks ago) and Sean Cassidy, president of DKC (someone I’ve never met) about fixed retainer versus hourly rates.

When I started Arment Dietrich four years ago, a business coach told me that we would make money only if we billed our time. I’ve always thought about that, even as everyone complained not only about entering time, but tracking it against client projects.

That being said, we find that clients have a budget, they want to be billed the same amount each month, and they don’t want to pay by the hour. So we have a bit of a hybrid between the retainer and the hourly rates.  We help clients set budgets, based on what they want to accomplish, and allocate a certain number of hours per month against that dollar amount. Then we track our monthly hours and decide, if we’re going to go over, if it’s because we needed to train internally or because the client asked us to do something outside of scope. If it’s outside of scope, our account leads have to have a conversation with the client to either switch gears and not do the new project (or, in very rare cases, even get additional dollars).

This allows us to do what Cody says: Get paid for the strategy and high-level thinking that goes into getting the results.  As Cassidy suggests (and PRWeek agrees with), we should do anything and everything it takes to get results, even if it means we spend $40,000 in time, even if the budget is only $20,000.

I’m a fan of PRWeek. I think their editorial staff is smart and savvy. It surprises me they agree to what sounds like something only a big agency can do…overservice because they have the resources to do so. If we did that, we’d be out of business by now.

We’ve talked on this blog, in recent weeks, about creating value-based fees. But, we haven’t yet found anyone who wants to pay us a hybrid of a flat fee for strategic thinking and ramping up, and then bonuses for affecting business growth. Could be the economy. Could be no flexibility in budgets. Could be we’re just ahead of our time.

What is working for others?

Gini Dietrich

Gini Dietrich is the founder, CEO, and author of Spin Sucks, host of the Spin Sucks podcast, and author of Spin Sucks (the book). She is the creator of the PESO Model and has crafted a certification for it in partnership with Syracuse University. She has run and grown an agency for the past 15 years. She is co-author of Marketing in the Round, co-host of Inside PR, and co-host of The Agency Leadership podcast.

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