Using hourly-rate charging method in Myanmar (creative agency to client) - Sample demonstration
I just want to have an open discussion on this topic.
Nowadays in Myanmar, most marketing and creative agencies charge by two methods which are retainer based charging method and project based charging method.
Retainer based charging method is simple. There is a pre-determined plan at which how many creatives are needed and how many hours are to be spent by team members. Project based charging method in Myanmar work by invoicing for each items of work. There will be split rows such as community management fees, idea fees, reporting fees and so on. Project based charging method is used mostly in campaigns.
In project based method, only after client identify number of activities and content in general, the exact price estimation can be done. So this gives me the idea what if we think about hourly rate charging method. The following table is how an agency from a developed country charge to client and how it is comparing to their actual salary. The fees charging to client is around 4 times of their actual salary. Please note that the following table use USD currency.
Then based on the above information, let's consider Myanmar market also apply the same difference, 4. The following is a scenario at which a typical digital marketing campaign's need from an agency in terms of working hours. We can assume the campaign duration is two month. Deliverables will be one main TVC, few different edits, and some other assets in asset category, and one user generated campaign in campaign activity category.
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Then let's look at their monthly salary. Please note that estimation come from my personal judgement. However, I just want to give you the idea about how I calculate for Myanmar market. If you have your own company accounting data, you can do the exact calculation. The following table use MMK currency.
Then, when the agency send the quotation to a client with man hour rate, the reference hourly rate will be 4 times of the actual hourly earning as this is comparing with an agency from a developed country. Then I got the following table. Check the yellow color part. The following table use MMK currency.
Therefore, with two month worth human resource costing 47,000,000 MMK in gross , the agency can earn 16,000,000 MMK in gross within two month. Currently average total hour representing the whole team is 48 hours only. There are 170 hours a month. It means the agency can work for up to 4 clients a month. When the agency has two client, the loss will be covered. When having more than two clients, the profit is there.
I just love doing math. My whole estimation can be upside down in reality when the hourly charge rate is applied by considering all factors that include labor fees by labor law, and so on.
However, does my calculation make sense to you? What do you think?
Managing Director, ERA Communications
2 年Such an interesting topic that hasn’t been discussed enough! We never charged this way because often times traffic, junior team capabilities and even power cuts or other factors can skew the time. Our senior director time is also too expensive to make this practical for most clients, so we try to invest our time into deliverables-based billing instead. What I’d love to see, and would love to know your opinion, is more measurement by client and agency to justify billing based on value back to the organization. Good post!!