Hourly based work seems like the right approach…especially when it comes to marketing services. You only pay when you need something and you pay a pre-determined, agreed upon amount. Concerns over contractors delivering deliberately slow work aside, hourly engagements are easy to understand, and for an agency, easy to agree to. Furthermore, hourly engagements enable consultants to be called into battle when needed.
Hourly billing makes it very easy to bid on work – there’s no need to scope the requirements of a specific client and there’s flexibility to increase or decrease budgets as necessary. As a marketing agency, hourly billing also plays conveniently into one of our 10 Commandments: It Might Not Be Our Fault, But It’s Still Our Problem. When we have a client who has some emergency, we drop everything to address that emergency. An hourly billing arrangement makes this very simple.
Despite that, hourly billing is a horrible way to structure an arrangement with a marketing agency because it encourages a reactive, instead of proactive relationship.
A brief non-legal anecdote….
We just fired our accounting firm after a nagging feeling that everything wasn’t being done both on time and entirely well. (btw – we’ve signed up with a firm called Accountfully that seems to approach their business in the same way we approach ours.) In our kick off call with Accountfully, they uncovered time and time again, stupid sloppy errors from our previous firm. Of course, we were getting what we paid for – or paying for what we got – the time it took to do 90% of the job well. But of course, with accounting (even more so than with marketing), I don’t want a 90% well done job. I want a third party, outsourced, I’m-not-going-to-worry-about-this-because-an-expert-is-already-proactively-looking-out-for-me peace of mind. So we’ve transitioned our arrangement from an hourly bill to a monthly retainer. And yes, I’m going to spend more money on accounting this year than last…except of course that that final 10% – the proactive part that ensures we keep the tax man happy is going to be managed proactively for me.
The reality is, we were paying our accountant for what they did…it’s just that what they did wasn’t a) done well and b) what they needed to do. A retainer (with a good firm) means you have someone proactively monitoring your business instead of reacting to your requests. And for a function you don’t understand or hate (in my world – accounting), that’s the way it should be.