How PR Firms Measure and Manage Retainer Accounts

time watchHow retainer budgets are measured and managed is sometimes a hot-button topic with PR practitioners, especially when the conversation focuses on sharing details with the clients. More specifically, whether to share billable rates with clients.

PR companies large and small have finite resources (time and man hours) that can be invested into any client account. This is measured in billable hours. While most PR firms don’t proactively offer hourly equivalents in the retainer proposal, all retainer work is measured and/or managed by tracking billable hours.

In estimating time and calculating retainer value, PR firms use an average billable rate. This is different for every firm, but it includes the varying billable rate of each member of the PR team-senior leaders (billed at the highest hourly rate) to entry-level and admin contributors (billed at the lowest hourly rate).

There is a direct correlation between the billable hourly rate and amount of time a PR firm will invest in your project. Let’s examine two 12-month retainer proposals based on dollar value only:  Firm #1 – $5,000/month   Firm #2 – $4,000/month

Assuming that the two PR firms and their proposals are equal in strategies, tactics and expertise it appears that the proposal from Firm #2 is a better value. However, if we consider the average hourly rate as part of the evaluation, we can see a significant difference:

  • Firm #1: $5,000/ month ÷ $75/hour = 67 hours invested on your behalf each month (on average)
  • Firm #2: $4,000/month ÷ $165/hour = 25 hours invested on your behalf each month (on average)

Over the life of a 12-month retainer, the difference looks like this:

  • Firm #1: The client will invest a total of $60,000 for 800 hours of PR work
  • Firm #2: The client will invest a total of $48,000 for 290 hours of PR work

Smaller accounts, to ensure profitability, are often managed by team members who bill at a lower rate but are less experienced. Larger accounts garner the attention of senior-level practitioners who bill at a higher rate.

While one should never select a PR firm based on cost alone, the ACTUAL cost should be part of the larger evaluation. This can be accomplished by asking three simple questions:

  1. What is your average hourly rate?
  2. How do you calculate how much time and effort will be allocated to my account?
  3. Who will be serving on my account and what are their billable rates?