Many agencies and design businesses fail to capture all of their charges on a client quote. We compiled a report showing where the main revenue weaknesses (or missed charges) are in a typical Creative business and generated an e-book with solutions and tips to help you estimate better.
Get your FREE COPY of the Agency Estimating Tips eBook here.
After 15 years working with creative businesses and 7 years conducting agency reviews, we’ve learnt that there is ONE single thing that must be accurate in your business for you to generate a healthy profit from your creative ideas. That one thing is your ‘charge out rates’.
So many creative agencies get this wrong and over time it can be a huge drain on your business and its profit potential.
The real challenge then becomes knowing what you ’should’ or ‘could’ be charging for each type of creative service you provide. How can you benchmark your rates against other players in the industry that are of a similar size, nature and operate in the same locality? No other agency is going to readily share information about their charge out rates with you – are they?
Well, we’ve made it really simple for you. Tick Boxer has undertaken an independent review of 65 plus agency rate types across the Australian creative industry to benchmark, for the first time ever, what the standard charge out rates are for agencies at three different strategic levels or tiers across the industry.
Would you like to know how your rates compare to the rest of the market? Well you can by taking our Free Agency Rates Assessment which will give you a FREE evaluation telling you whether your head hour rates are below, within or above the market range for your type of business.
In your assessment you can choose to benchmark yourself against a number of core categories including Management & Account Service, Strategic Planning, Creative & Design, Digital, Production and Studio.
This is a first of its kind report and if you complete your own personalised assessment before March 31st 2010 you will go into a draw to receive one of 5 iPod nano’s.
Assess your rates today to pin point exactly where your rates sit in the creative industry. Find out how to complete the Free Agency Rates Assessment now.
How do you ensure that all your creative efforts are rewarded by way of a healthy, profitable business? We give you key insights and practical solutions to ensure your projects and accounts are not only providing winning outcomes for your clients but for you and your business also.
After years teaching an Agency Profitability course for the Australian Federation of Advertising (AFA) (now the Communications Council) as well as through many of her own Adtopia training seminars, Debbie Pine shares her insights into the mix of activities you need to get right to ensure your agency stays on the road to profitablility.
There has been a strong trend over the last 18 months to really simplify the way agencies charge clients for additional overheads and disbursements such as local travel, phones, faxes, communications, lasers, presentation materials, PDF’s and all of those little bits and bobs that make up an agency estimate.
Around 1998, mainly due to the introduction of marketing procurement divisions and hence the level of accountability required, agencies started to break down their estimates in real detail in an effort to be transparent. This was a good thing in some ways but created bigger issues as clients would sometimes be overwhelmed by the multiple charging codes and start to pick them apart- seeing the breakout of fees as petty and irritating. 10 years later and the trend is moving in a different direction. Agencies are now starting to adopt a much simpler and effective charging method for overheads such as listed above. The common trend now is to list a one line charge on the estimate called “disbursements” and calculate that as a fee of the overall agency charges (not external costs like printing, media or any type of out-sourced production). This fee is calculated between the ranges of 5 – 10%, with 7% being most common. Clients are overall very excepting of this charge as they do understand the overheads agencies face and it is an easy to understand wrapped up fee that does not fight with the creative conceptual charges which, to be honest, are really the important fees on the estimate. The bigger fees do not end up killing a client relationship. Most often it is the smaller “nit picking” fees that clients feel are sneaking on to the estimate that ends up being the link to an argument – breaking down the overall trust between agency and client.
Using a disbursement fee as a way of charging a client mirrors a job well in the sense that if you are doing more artwork or authors changes on any type of job, the estimate is revised to account for this – hence followed automatically by the % disbursement charge. It is simple, automated and worth it. It achieves two core things than an agency strives to achieve; it captures those overheads charges properly so that an agency does not leak revenue as well as building and maintaining a better level of trust with clients (hence a strong partnership) as those small overheads are not creating irritation and ongoing day to day frustrating arguments.
One last thing to remember is to be clear about what is included in the disbursement fee. Ensure items like interstate travel, major presentations or other large and costly based items are not lumped into this fee as this could really eat into revenue. Be clear about the inclusions – our suggestion would be to list them automatically at the bottom of every agency estimate within the template so they always appear like contractual T&C’s.
If you want to get even better at estimating jobs, we also have a series of estimating templates that outline what charge codes you should be including on different media types.
For more help and advise contact the Tick Boxer team.