Unfortunately, sometimes hiring an agency can feel a lot like purchasing from a budget airline. You might click through an email that promotes flights for $49 just to find out that the deal is only valid for limited, inconvenient dates and doesn’t include round trip pricing, booking fees, seat fees, baggage fees, or refreshments on the flight. Now you’re looking at something that’s closer to $300 if you want the experience to be any good.

When hiring a marketing or advertising agency or consultancy, fees inevitably exist. Even if an agency doesn’t outwardly charge you for onboarding, for example, you can bet the cost is rolled up into some sort of expense.

Here are the most common agency fees and costs.

1. DISCOVERY / ONBOARDING: $10K TO $20K

Onboarding—also called a discovery—is time for the marketing agency or consultancy to get up to speed with your business.

For production agencies, this will usually cost a lot less, since they don’t necessarily need to understand how your business works to get the job done. For example, if you just want someone to design your business cards, extensive onboarding isn’t necessary. But if you work with a strategy agency or consultancy, discovery is a big part of making sure the partnership gets started off on the right foot.

All in all, onboarding usually costs between $10k for a local-retail-size business and $20k+ for a national or international company. Not every agency will flat out charge you for an onboarding fee, but if not they’ll make up the time spent learning your business in their hourly rate or in another type of miscellaneous fee.

If you think back to our earlier metaphor, some airlines make you pay for each individual item like seats and bags, while others charge you one fee that covers everything. You might not see every line item on the invoice but either way, you’re paying similar amounts, they’re just packaged and marketed differently. The same thing applies with marketing and advertising agencies.

2. TECHNOLOGY FEES: $200 TO $25K+

Like onboarding, technology might be budgeted as an additional fee or simply included in the hourly cost of the agency. When it comes to technology fees, there are two types:

1. Cost of the technology to do the work
2. Licensing fees

In the first instance, agencies will ask that you pay the fee for the technology they use to do their job. An easy example would be paying for Adobe’s Photoshop for a designer to create a digital ad. Another example might be paying the cost of a reporting dashboard software such as Domo or Tableau.

Licensing fees are the second type of technology fees and relate to the martech your business uses. The easiest example would be your CRM or marketing automation system. If the agency you’re working with licenses the software on your behalf, they might take a cut because they’re handling the service of that software.

Technology fees can range from as little as $200 a year to $20k+.

3. MEDIA FEES: 3% TO 15% OF SPEND

Not all will, but most media and advertising agencies take a cut of your media spend (around 3% to 15%), especially if they’re playing the bank and their card is on file with the media platform. So, if you’re spending 1 million dollars on media, they may take up to $150k of that spend.

Additionally, you might get charged for platform fees, which come from the advertising platforms themselves and are passed on to you.

4. SERVICES MARKUP: 10% TO 20% OF COST

Let’s say you work with an agency and you have materials that need to be printed. The agency might not actually print the materials, but rather outsource them to a printing partner. They would, in turn, mark up that service between 10% and 20% to cover their role in vetting, organizing, and managing the vendor.

If the agency has a 10% markup fee and something costs $100 to print, that means you’re paying $110 in total, the agency is keeping $10, and the vendor gets $100.

5. TRAVEL COSTS

When a marketing or advertising agency or consultancy has to travel—whether that’s for a meeting, a trade show, or a photoshoot—that cost will be budgeted either as a separate travel cost or within their hourly rate. Agencies and consultancies do not make money on travel costs—any hard costs like food, airline tickets, or sleeping accommodations are simply passed through without any kind of markup.

6. PROJECT COSTS AND PRICING

Once you get through all the other fees, the actual cost of the project will be the meat and potatoes of the budget. There are a few different ways that agencies bill their services. These include:

• Fixed Fee: A scoped cost for a project.
  • Ex: This brand project costs $150k.
• Time and Materials: When you work against the time and materials it takes to complete a project, usually with a budget ceiling in mind.
  • Ex: We will create a campaign for you that will cost up to $100k (possibly less) and will bill you as we make progress against the project.
• Retainers: A set amount of time you get from an agency each month.
  • Ex: We have 20 hours’ worth of agency time to use against a variety of projects.
• Hourly Pricing: A way of pricing a project based on the amount of time it will take the agency or consultancy to complete the work.
  • Ex: This will take us 40 hours at an hourly rate of $150.
• Value Pricing: A way of pricing a project based on the value of the service being provided.
  • Ex: From our observations and experience, we believe a new website is worth $125k to your company.

7. CHANGE ORDERS

A change order becomes necessary when there’s a shift in deliverables, timelines, or budget. Change orders aren’t always necessarily bad, but they do affect how much you’re paying.

As we mentioned above, the cost of the project will be the meat and potatoes of the final budget.

Understanding marketing and advertising agency pricing is simplest when we have an actual service or project to use as an example. In our experience, there’s typically a lot of confusion in the sales process about brand—how much it costs, what the process entails, and what makes a brand project more expensive. So let’s start there.

One of the reasons marketing and advertising agencies don’t like to publish prices for specific projects is because they don’t want to over-promise and under-deliver. It’s also difficult to set standard prices because of all the variables that affect each project. Instead, most agencies scope the work and create a customized quote that fits the work the client needs.

All that said, to refine, revamp, or create an entirely new brand, it costs anywhere from $20k to $500k or more.

Now, it doesn’t take a data analyst to realize that “$20k to $500k or more” is a huge range. So a better plan for you as a buyer is to understand what drives the agency costs up or down—something that will actually help you when you’re budgeting for other marketing services as well.

Like most strategic projects, the process of rebranding or developing a new brand takes a lot of research. Which means a lot of the costs are driven by the upfront work the agency or consultancy does for you. While different agencies have different names for their processes, the research phase of brand contains four main elements:

• Internal Perspective: What do your leaders, employees, and stakeholders believe you are?
• Customer Perspective: What do the people you work with say about you?
• Communications Audit: What message are you currently putting into the world? How effective is that message?
• Competitive Audit: What are your competitors doing? How does your message differentiate in comparison to theirs?

As you could imagine, working through these steps would look very different for a mom and pop shop vs. a brand like Nike. The more complex your brand is, the more inputs you want (both qualitative and quantitative), the bigger the pool of employees, the more interviews that need to be completed, the more competitors you have, the more internal reviews…the more expensive the project will be. Plus, more inputs and data means it will take more time to actually synthesize all the information, which will also drive the cost up.

The research phase is just the beginning. After that, you’ll need to bring it to life from a messaging and visual perspective, and then share it with the world. The real cost drivers after you synthesize all the inputs will be stakeholder approvals and rolling out the brand (which is typically another project in and of itself).

We’re not going to break down every single marketing project that exists in this guide. But here are some ballpark estimates to help you get a better understanding of costs in the market.

• Brand ($20k–500k+)
  • Phases: Research, synthesis, concepting, creation, sharing
  • Cost drivers: Type of research, brand complexity, review process
• Website redesign ($50k–300k+)
  • Includes: Research and planning, execution (setup, prototype, backend, frontend, QA, launch)
  • Cost drivers: Content creation, size of website, integration needs, design sophistication, hosting needs
• Multichannel marketing campaign ($40k–100k+ per campaign)
  • Phases: Concepting, blueprinting, creation, campaign management
  • Cost drivers: Number of channels, number of audiences, technology stack, review process
• Paid media management ($10k–30k+ per year)
  • Phases: Planning, campaign management
  • Cost drivers: Numbers of channels, number of audiences, technology stack

In many cases, money is the elephant in the room that no one wants to talk about. Eventually, though, you will have to address the elephant to move forward with a marketing partner. Here’s a few tips to enter the sales process with confidence.

COME PREPARED

It’s completely fine not to know the exact budget you’ll be working with for a given project. In fact, many of the conversations we have end up with our team leading the conversation on what the budget should or shouldn’t be. However, having no idea whether you’re going to invest $50,000, $100,000, or $1,000,000 into a project leaves the conversation undefined. Do the homework beforehand and show up to the meeting with a range you’re willing to work within. This will help your agency tailor the approach for your resources and goals.

BE TRANSPARENT

Your solution is almost certainly going to need to be customized by your marketing partner. Being transparent about your budget will help give you the most efficient solution, and potentially save you money in the long run.

Also, remember that no agency is there to judge your budget. It’s just money. If your budget is too small for the agency you’re talking with, they should either help you evaluate if you need to increase your budget in order to meet your business goals, or they might help you find a partner who can meet your needs within your budget.

UNDERSTAND HOW PROJECTS RELATE TO BUSINESS OBJECTIVES

Unless your budget is infinite, you’re going to need to prioritize based on what’s important to the success of your marketing, not just what would be cool to have. When you go to renovate your kitchen, you pay for a nicer stove top before you expand your kitchen island and cover it with marble.

The same idea relates to your marketing goals. If you’re redesigning your website, but your website doesn’t actually contribute to business revenue each year, it doesn’t make sense to invest $200,000 in it (unless, of course, you’re shifting objectives and want to turn the website into a lead generation sales tool). Evaluate the importance of the project to your business to help figure out what you should be budgeting for the work.

With pricing out of the way, we’re moving on to researching different agencies and consultancies, the problem with RFPs, and finding the right marketing partner to grow your business.