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Billing for Management Time

What % of a job should be allowed for account management/client consultation when creating an estimate?

I believe we need to lessen the overhead time of a job and leave most of the work to creatives but have no guidelines as to what "management" time is really necessary.

Any help would be great!

Thanks,

Denise Alter

That is the $1M question!! I've been asking that for 5 years.

What I've learned: clients view account management as "implied" and balk at paying what it really costs.

So sometimes we build proposals like this: budget for actual account time on the job in hours but cut the billing rate in half (if it takes 4 hours account time, charge the client for 2). Then tack that discounted rate to the creative hours (creative is budgeted for 6 hours but charge the client for 8). Everybody is happy. Accept the account team, who really hate being discounted... But there is no magic bullet in pricing. Takes experience and understanding of the market. And knowing when to value price versus time & materials pricing.

Good luck. Keep statistics and review your modeling frequently.

Roxanne Cowan

We bill for our time. Whether it is creative or account management or production or accounting. We sell time just like Lawyers or CPA's. They are professional's and so are we. I hate to see any "discounting" of account management. This is a client that doesn't understand the intrinsic value of strategic thinking. And I don't care how creative your creative's are, if they don't have good planning, thought, and research, they can't create ad's that are on strategy and effectively going to reach the right markets, and actually sell the clients "product", which, after all, is what we are in business to do. (however, we don't add any % markup, we bill straight time. )

So, we don't consider account management "overhead", and we don't discount that time. It cost's what it takes to do the job, correctly. We hand over a rate sheet immediately. I'm sorry if I sound like I'm on a soapbox, but perhaps that is where I am. Good luck.

Shelly Constantz

I felt your passion in this answer!

What if the job was worth more than the hours generated to produce, would you charge more?

Honestly - we rarely bill by the hour and I NEVER tell the client how much time it takes. We have been value pricing for years, I bill by the job and what it's worth. Harvard Business Review recently had a great article about Lawyers & CPAs moving towards value pricing too.

(I've asked and answered many questions of the user group very recently on this subject...)

Roxanne Cowan

This is hard to answer. All of our clients are on retainer. And generally we don't estimate hours, unless the job is outside the fee/retainer. And we don't bill hours on every job. We reconcile hours against the retainer/fee.

So, some jobs take more time even though to some it shouldn't have (I had a table tent recently that was way over what it should have been in time). And some jobs take less time that look like they should have taken more. For us, it basically equals in the end. But all time is recorded and all time is put against the fee, with a minimum retainer amount.

If I have to estimate hours though, I will usually bill to estimate, even if we are under. And I will usually bill to estimate even if we are over. Exceptions are when it is the clients fault we are over. Then a change order should have been completed and signed, anyway. And we estimate what it should take to complete a job.

I am most sensitive to any suggestion by clients of advertising professionals being compared to used car salesmen ( I don't mean anything disparaging against used car salesmen). If you are keeping your pricing and your value high, then good on you. I just don't like the wheeling, dealing that some companies think they can do to ad agencies, particularly when it comes to the time required to give a quality piece of work. We should all be very careful of dropping our drawers any time a client wants. And I believe that it is very important for clients to understand the importance of the account manager. They are the clients advocate inside the agency.

With that said, I appreciate how everyone is so helpful with this user group. It is a pleasure to hear from all of you, and I learn something new all the time. Thanks, shelly

Shelly Constantz

What month was the article in?

Doris Tarjan