EDITORIAL: Marketing Pricing Structure – Hourly Rates vs. Monthly Retainers

Marketing Pricing Structure - Hourly Rates vs. Monthly Retainers - Blue Interactive Agency

Forbes Magazine recently published an article about the advantages of charging clients based on value rather than time-based pricing. While this model may be challenging to adopt when first starting out as a new agency or service provider, it can lead to a more sustainable and rewarding pay structure for both the client and the provider. Here, we’ll take a closer look at the article’s key points. 

Here is an excerpt from the article:

Value-Based Pricing Versus Time-Based Pricing for Marketing Agencies 

By Jordan Platten, published by Forbes, May 21, 2021.

We are taught that an hourly rate is the only way to measure your contribution and the only way to determine the value that you’re providing, and that very quickly turns you into a commodity. We are essentially raised to believe that our time has a direct relationship to the amount of money we deserve.

The key is to stop focusing on time-based pricing and instead focus on what is known as value-based pricing — and trust me, this structure works in the interest of both you and the businesses that you work with. In simple terms, most agencies begin by offering their services at an hourly rate and not pricing them based on the value that said service provides, and this is wrong. 

So, let me tell you what’s wrong with time-based pricing. The faster you work, the less you get paid. Naturally, your clients will want you to work less so they have less to pay at the end of the month because that’s just the world we live in, but ultimately this results in a lower standard of work fulfilled. Once you reach a peak of time in the day, because time is limited, you won’t be able to scale your agency any further…

An easy way to start introducing value-based pricing within your business is through fixed recurring monthly retainers.”


Here is our take on hourly rates vs monthly retainers:

How and what to charge clients for services is a bridge that all service providers have to cross. The author makes a sound argument for transitioning from time-based pricing to a value-based model. It’s quite true that many agencies equate time with rate of pay, and that’s not surprising considering that service providers ranging from attorneys to plumbers charge clients by the hour. 

However, for today’s agencies, time-based pricing models have become increasingly outdated and fraught with difficulties. For instance, in time-based models, profits are entirely dependent on time as opposed to the quality of the work. Time-based models don’t foster collaboration either, because clients are often loath to tack on phone calls and meetings since they’ll be charged for them. 

Instead, the author points out the advantages of moving to value-based pay structures. In this model, the emphasis is on the quality and expertise associated with the work rather than the time it took to complete the work. The author suggests using a monthly retainer to charge for services, and although this might not always answer for all clients, it’s a great way to structure payment for the VALUE the client is receiving. We often find much more value does go into the work when we can utilize our entire team to help make the right moves for our clients. You can easily tap into key resources and team collaboration on marketing efforts that will produce the best results, rather then just doing hourly work by team member or excluding specific services that don’t allow you to see the big picture in your marketing.

There are many growing pains that agencies experience as they build their success, and pricing models are just one of them. But what we have found to be the best approach for us just as much as for our clients is providing a well-rounded package that is structured specific to the strategy each of our clients need. Blue Interactive Agency will always work with each indivdual client to see what the best stratgy and approach to digital marketing is for them and to setup services that will provide the most value to our clients.  If you’d like to learn more about the services we offer or how we can provide value to your company, contact us today!