Creatives urged to rethink how they're paid

Freelancers wondering how to charge for their services can gain ideas from the latest probe into how creative agencies are billing for their services.

Charging an upfront fee – known as a retainer – is currently the most popular option among agencies serving the PR, Design and Advertising industries, says a new report by Paprika.

The report, obtained by Freelance UK, shows PR agencies are the likeliest to charge a retainer, partly because the arrangement gives them financial security and helps with cash flow.

Retainers are best suited to lengthy assignments “where consistent effort is required over the duration and where costs other than time are relatively limited,” the report says.

But, it adds, with so many clients “disliking retainer” agreements, agencies were urged to “reassess how they’re paid,” if they want long-term, healthy relations with their clients.

For PR agencies, the second most popular payment structure involved a ‘fixed price’ coupled with the outcome of the project or services.

The biggest user of combining both fixed price and project-based outcomes was advertising agencies, which emerged as the least likely to impose a retainer agreement.

Meanwhile, Design agencies were the only respondents out of the creative trio to charge for time and materials, but most said services to the end-client were charged out at a fixed price.

Retainers were also popular among design consultancies, though a significant number combined project outcomes and time or materials to determine payment.

Possibly this was “because of the more ad-hoc and varied nature of their work,” Paprika said.

Elsewhere, the software company’s probe found most creative agencies measured their performance firstly by the profitability of each job and then by their overall profitability.



 

23rd January 2007

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