Beware of Hidden Costs of Hiring a PR Firm
Perhaps the most often asked question companies ask when hiring a public relations firm is, “what does it cost?” Interestingly, this is also a question many PR firms have difficulty answering.
There are three basic ways that firms charge. First, and perhaps the most common, is the monthly fee. A PR firm will give thought to how many hours per month they will need to devote to your account and then come up with a flat monthly retainer fee. Many will also charge for extra hours that are worked, usually with prior client approval. But if the firm spends less than the number of hours they are projecting per month do they give a credit? Usually not.
The second most common method is hourly. This is the same way lawyers charge for their time. The firm will charge an hourly rate based on who is working on your account, and at the end of the month, you get a bill with an itemized list of what work was performed and by whom. Of course, a client never really knows how much time PR work takes. Likewise the same is true when hiring a law firm or any other consultant.
The third method is charging by the project. Suppose you are in need of a firm promoting your special event. There is a start date and an ending date. The PR firm will set a price for handling the special event with an itemized listing of what activities they will perform for the fee so there are no misunderstandings.
These three billing systems appear rather straight forward. Then why is it that so many clients suffer from invoice shock when they get their PR firm’s bill?
First, most PR firms also charge for what is called out-of-pocket expenses. They charge for telephone, travel, mailings, hiring vendors and the like. At the beginning of a relationship, it often doesn’t seem like much of a factor, until the client sees what a firm can charge for every call, fax, per mile of travel and so forth. This is particularly true with larger PR firms where the out-of-pocket expenses can total 20% of the monthly fee.
Believe it or not, we have also heard of situations where PR firms charge an administrative fee. What’s an administrative fee? There are variations, but generally speaking, some PR firms will tack on an additional 10% or 20% surcharge for basic overhead. We even know of one instance where a firm totals up all of its overhead – rent, salaries, office supplies and so forth — and divides up the total among all its clients and charges each one this additional fee. Rather unbelievable.
The lesson to be learned is when seeking a PR firm, obtain clarity when asking about their billing procedures. Don’t allow a firm to focus only on their monthly fee and downplay the expenses, as expenses can shoot up your monthly bill considerably and unexpectedly.
Some firms, like ours, have taken it upon themselves to not charge for operational expenses like local telephone, local travel and the like. We believe this is the cleanest and most honest method of charging for our services and will only charge when we hire an independent vendor on a client’s behalf with their prior approval, and with no mark-up.
Getting publicity in the media may be free, but hiring a PR firm to get it for you is not. In today’s marketplace, every dollar counts and that certainly includes the consultants you hire.