Five good reasons not to pay marketing or comms consultants by the hour

When you're getting your hair cut, you don't pull out a stopwatch to see how long it takes the stylist to get it just right.  

What matters is whether you like the cut in the end.

That’s the best way to approach hiring a marketing or communications consultant, too. Project-based or retainer fees should be the norm. 

Here are five reasons why hourly billing is terrible for the client:

Reason No. 1: It incentivizes consultants to work slower. 

With hourly billing, the more time the agency takes, the more money it makes. Instead, you want to incentivize any vendor to work efficiently.

Reason No. 2: It discourages you from calling your consultants for advice.

I can’t tell you how many times I have chosen not to send an email or place a call to a lawyer for advice. Why? Because that 15-minute call is going to cost me $300!

We want our clients to think of us as trusted partners. We want them to call us for advice. That’s our whole purpose.

Reason No. 3: Our value is our expertise, not our time spent. 

A seasoned former journalist can write a flawless press release in 45 minutes, while it might take another person 3 hours to write a terrible one. 

And when doing creative work, my best ideas often come in the shower or while playing tennis. 

When you're paying for experience, how much time it took to do the work has nothing to do with the quality of the final product or idea.

Reason No. 4: It incentivizes agencies to hire inexperienced people. 

An agency that bills by the hour can increase its profit margin only two ways: Hire cheaper labor or up the hourly rate. 

But the supply of agencies and freelancers exceeds demand, leaving little room for agencies to charge above-market rates. 

In almost all cases, the easiest way for an agency to increase its profit margin is to hire cheaper labor. It’s why you see so many small and midsize PR agencies staffed almost exclusively by young people. (In the most egregious cases, I have caught content marketing shops off-shoring writing assignments to pad profits.)

How does that affect you, the client? It means that inexperienced associates will be the ones actually doing your work, and not the vice president or partner who sold you the business. 

Reason No. 5: It invites dishonesty.

While the client might think the agency is only charging for time spent, I have my doubts. An hourly contract typically has a cap: “We’ll supply up to 20 hours of work at $200/hour.” 

It would be rare for an agency to come back and say: “We only worked 10 hours. We’re going to cut our fee for this month in half.” 

So, after reading this article, you have no idea how long it took me to write it. Indeed, it’s irrelevant. What matters is whether it’s clear and valuable to you. 

Melissa Harris is CEO of M. Harris & Co., a Chicago-based marketing and communications agency, and a former business columnist at The Chicago Tribune.