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Basis for Hourly Rates

I was just wondering how other agencies bill their clients i.e. by task, by staff, or any other. We charge our clients by staff. For example, we charge $100 per hour for Mr. Smith regardless what tasks Mr. Smith performs. The option we are exploring is to charge different rates for various tasks that Mr. Smith performs for clients. So we could bill $95 per hour for one function while $150 per hour for another function that Mr. Smith does.

Johnson Paul
Controller
Campbell Michener & Lee

The problem with changing rates for the same person performing different task is that the client will ask you to have him perform the cheaper task. It is hard to justify different rates for the same person when your cost are fixed for that individual.

Steve Orenstein
Kern Direct

We generally bill on a project level, not individual rates. We do however, have different rates for staff members that build into the total estimate. Our rates are determined by what the market will bear. On PR services we bill hourly. Our AEs are at a lower rate that the Account Managers. We do look at all staff costs each year to verify that our rates are covering our costs plus overhead load.

Ann Adams Controller J. Stokes & Associates

We charge by task. Here is a list of our most used tasks.

Creative Development
Project Management
Art Direction
Design Development
Production
Digital Retouching
Print Supervision
Project Administration

The task drives the hourly charge to the job.

Shannon Asquith
Business Manager
Tackett Barbaria Design Group

We bill clients, when it's a time and materials type project, by task rather than staff member (Art Direction $140, production $70, etc.). However, most of our projects are estimated and billed on a PER PROJECT basis rather than hourly.

Kay Rosburg
V.P.
Dever Designs

My question is what will be the formula for billing by task? I know how to do it by staff member but not by task. How can you be sure you are making a profit?

Ed Miller
Grafica

I prefer the hourly rate to be based on the task more than the person. If you do tie it to the person, Jr Ae's, Sr's etc. you need to follow thru on maintenance changes,(when Ms.X gets promoted, maintain the cost related fields in employee and tasks). I feel that a color print is worth $X regardless of who prepares it, but the Design and creative areas can be billed $xx for Jr's and $xxx for Sr's. This can be handles by individual (more maintenance) or by task (DeJr, DeSr, etc..) At least with C&P you can experiment and if you don't like it, it's easy to change....just follow thru on all people & tasks!

Mich Patriarche
CPA
LREA
GRI

We bill by nature of job rather than by nature of staff. We've found the clients are willing to pay a perceived value for the work regardless of how we accomplish it internally. We also don't bill hourly per person, but at a "blended rate" for the agency as a whole. The reason for that is that sometimes you can think of a headline in 5 minutes and sometimes it takes you 10 hours. That's not the client's issue. If it only takes 5 minutes surely you're not going to charge that, and if it takes 10 hours, you can't really charge that either. So we tell the client up front what the estimated range is for our creative and production tasks and get them to approve an estimate of those costs. If it looks like we're going over, we tell them that, too, and let them approve the additional $.

M Kirch
Sun and Moon mktg

We bill by task. For example: If Mr. Smith bills his time for account management type work (which may consist of several tasks, such as client contact, writing, editorial contact, etc.), it is billed at $150. However, if Mr. Smith is not busy and can do some of the "support staff" type of work, he uses a support task code which bills at a much lower rate. To accomplish this, I have to set special billing rates in the staff setup area of clients and profits.

Jody Breiland
McClenahan Bruer Communications Inc.

Johnson, we bill by task, so Mr. Smith may spend 3 hours one day at a $100 per hour task, 2 at a $125 per hour task and fill in the gaps with other tasks.

Misty Young
Vice President
KPS|3 advertising, e-marketing & public relations

On the account service side it is difficult to charge clients different rates for different tasks. Usually an account person will be of a certain seniority and has a specific bill rate. On the produciton/creative side, we do utilize different bill rates depending on whether a graphic designer is doing creative, production, web work, or photo retouching. This is never an issue.

David Tracht
Full Circle Productions

Why does the client have to know who is doing the work? If work is done to their satisfaction that should be all that matters.

Larry Borton
Kyderby

To avoid a client coming in and asking for one person over another because of price, we charge a flat fee per task. It does not matter who performs the task. Our fees are Design 125, Layout 65, Admin 50, Illustration 150, and PhotoShop 150. Because we are in-house we also discount the final charge.

Larry Borton
Director of Creative Services
Churchill Downs Incorporated

We also use a rate per person except for the senior marketing person (me!). I have three different rates depending on if I'm doing account management or creative or marketing development. Since we use the rates to build our budgets, and the clients don't see the hours per task or per person, it's not an issue to ask for someone billing at a cheaper rate. However, I will mention to clients when I bring an account manager in that she will bill at a lower rate than I do, so it will keep the overall costs down on implementation once I've been involved in the initial planning and setting the framework for the project.

Jennifer Larsen Morrow
marketing being
Creative Company, Inc.

They don't need to know who is doing each part of their job. They do need to know how much each step will cost. Our fee schedule provided to new customers is the only time we break down hourly rates, unless a client makes a specific request for that information. Our quotes show a total cost by task and a total for the job. We rarely have inquiries beyond that.

Shannon Asquith
Business Manager
Tackett Barbaria Design Group

We us an average salary rate for the staffers who bill under a given task. Our goal is for designers to bill between 3.5 to 5.5 times their salary. This benchmark comes from Phil Edwards from Edwards Management Group who shares financial tools for the graphic design industry through APDF.

Shannon Asquith
Business Manager
Tackett Barbaria Design Group