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When you’re looking to hire a marketing, web, or design agency, it’s natural to wonder what your costs are going to be. Which means you want to know what the agency’s hourly rate is, right?
So, what is your hourly rate?
This seems like a simple question that should have a simple answer of X dollars per hour. But it’s not, and here’s why.
Ask, “How Will I be Billed for Work?”
Agencies typically bill clients in one of the following ways:
- flat project rate
- value based pricing
- monthly retainer
Some agencies use different billing approaches for different situations. While others, only use one billing method.
That’s why you should ask, “how do you bill for different types of projects and work?”
Understanding when you’ll be billed an hourly rate is important. But, by asking a few more questions you can save yourself from an unexpectedly high bill in the future.
You’ll also avoid sending your bookkeeper into a fit of rage that would scare Liam Neeson in Taken. Your bookkeeper will look for you and she will find you.
Avoiding Shocking Bills for Hourly Work
You’re meeting with two creative agencies that both charge $120/hour for hourly work. So if you send them work that will take the same amount of time, your bill from both will be the same. Right? Nope. Here’s why.
An agency’s policies can have a massive effect on their stated hourly rate. Here are four types of billing policies that affect your final bill:
- Different rates for different services
- Minimum billing increments
- Standard turnaround time and rush fees
- Automatically doing the work then billing vs. estimating before doing the work
Here are four questions to ask so you aren’t blindsided by billing policies.
1) Do you bill different hourly rates for different types of services?
Some agencies have a universal hourly rate. Whether they’re programming, designing, or copywriting, you’re billed the same amount for an hour of time.
In contrast, other agencies may charge you a higher or lower rate for different services. For example, an agency might charge $150/hour for programming, but $90/hour for project management.
2) What are your minimum billing increments?
If an agency is charging you $120/hour, that does not always mean that they are charging you $2 for every minute of work.
Let’s imagine you’re talking to three agencies before hiring one. All three agencies have told you their hourly rate is $120 an hour. While they have the same hourly rate, they probably have different minimum billing increments. This will affect your final bill.
You send each agency a simple task that will only take 10 minutes.
- Agency A: charges you for the 10 minutes of work provided—your bill is $20.
- Agency B: bills in 15-minute increments; making your total $30.
- Agency C: has a 30-minute minimum, so your bill ends up $60.
3) What is your standard turnaround time for hourly work? When will you charge me rush fees?
If you’re having your web agency handle routine web updates for you, you should ask what the standard turnaround time is.
Say your agency’s standard turnaround time on updates is within 5 business days. But the CEO of your company has surprised you with an urgent update that needs to be online tomorrow. This is a situation when rush fees will apply.
Why will you be charged more for the same work completed sooner? In these situations, your agency has to do some combination (or all) of the following to meet your deadline.
- Delay other paying work that was scheduled for completion
- Work overtime
- Contract extra outside help
Knowing your agency’s turnaround time is only one aspect of the time needed for changes. The other—how long will tasks take?
This leads to…
4) When will my agency do the work and send me a bill? What situations will they give me an estimate before doing the work?
It can be hard to know how long tasks will take to complete. Often what you might think is complex is straightforward. The inverse is also true. A simple change can have unintended consequences that will cost more to rework.
So how do you get on the same page with your agency when you don’t know how many hours requests will take?
An example of how this can work:
You agree with your agency that any request that’s less than $500 to complete, they’ll automatically do it. Any work they think will exceed $500, they’ll create an estimate and get approval before proceeding.
That’s why it’s critical to have this understanding with your agency. Unless of course, you enjoy getting a shocking bill at the end of the month.
- Hourly rates AND the policies surrounding them are different from agency to agency.
- Those policies can have a massive impact on your bills.
- By asking a few questions before hiring an agency, you can save yourself money and frustration.