Engaging a PR firm involves navigating various billing arrangements that dictate the financial dynamics of your partnership. Generally, PR firms adhere to one of three primary billing models: (a) hourly rates, (b) project-based fees, and (c) monthly retainers. 

Remember that you are the client and should have a voice in how you want to be billed according to your organizational culture, needs, and budget. So it is crucial you know your options. Below is an overview of each type and their respective pros and cons.

HOURLY BILLING

Pros:

  • Transparency: Clients pay only for the time the firm spends on their project, promoting a transparent work relationship.
  • Flexibility: Suitable for short-term engagements or standalone projects that have a defined scope.

Cons:

  • A firm’s value often transcends the time required to complete a task. For example, a five-minute call to arrange a meeting with a high-level corporate or government official is worth more than five minutes. This is why many firms resist billing by the hour. 
  • Unpredictability: The final amount of hourly work can often exceed initial estimates, leading to budget overruns.
  • There is no incentive for a firm to be efficient.
  • Administrative Burden: Requires meticulous tracking of hours spent, which can be administratively burdensome for an agency.

PROJECT-BASED BILLING

Pros:

  • Clarity: Both parties agree upon a fixed fee for a defined scope of work and a specific length of time according to rigid and precise financial limits from the onset.
  • Budget Control: Clients can manage budgets more effectively with the knowledge of the exact cost of the project.

Cons:

  • Limited Flexibility: Any changes or additions to the scope of work can incur additional costs. It is extremely common for project work to expand beyond the initial agreement.
  • Focus on Deliverables: The firm might focus on meeting deliverables rather than nurturing a strategic, ongoing relationship. They may also resist exploring other creative opportunities because it would blow the budget. 

MONTHLY RETAINER

Pros:

  • Steady Working Relationship: Encourages a long-term, collaborative partnership where the firm immerses itself in your brand’s journey.
  • Predictability: Offers budget predictability with a fixed fee charged monthly.
  • Retainers are intended to balance busy and slow months so that over a period of a year, the payments are predictable, and the client isn’t hit with a large bill during the several periods when work is extremely busy. 

Cons:

  • Underutilization: There’s a risk of underutilizing the firm’s services, leading to a situation where you are not getting value for the retainer paid.