Best Practices in Charging for PR Services1. The Catevo Group
Best Practices in Charging for PR Services
(or, how to get what you want without calling in the lawyers)
Roger M. Friedensen, APR
Vice President
The Catevo Group
September 28, 2007
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION 1
2. Consider this . . .
“Armageddon is upon us: The PR industry has been
commoditized in the years following the turn of the
millennium economic downturn. Many organizations’
senior-most people . . . have been replaced by junior
employees . . . who can’t provide the high-level
counseling required to keep the industry afloat. Thus, the
counseling services that could and should be provided by
PR agencies have been cannibalized by the likes of
McKinsey, where executives can command higher prices
without question.” (PR News, Aug. 13, 2007)
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION 2
3. So I Was Thinking . . .
“Best Practices in Charging for PR Services”
“Best Practices in Collecting for PR Services”
“Best Practices in Making PR Profitable”
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
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4. Square One
Competition, confusion and credibility (as always)
“Thanks a lot, Sam . . .”
Procurement and purchasing rule today (and for the
foreseeable future)
A cautionary tale
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
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5. What Are Some Folks Doing?
Ninety percent of firms:
– Have some or all clients on retainer
– Bill a flat rate for some services (at least sometimes)
Media training, crisis plan development, message
development sessions, simple news releases and
“bundled services” are most frequently billed at a flat rate
When billing by project, 63% bill the quoted fee rather
than actual hours worked
Source: WORLDCOM Billing and Finances Survey 2007
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
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6. What Are Some Folks Doing?
Percent markups for out-of-pocket expenses most likely
for print and audiovisual services
One-third bill internal account team meetings
While six percent had profits of 25% or more, 23% had
profits of 10% or less
Over 80% spend 40–69% of gross income on salaries
Two-thirds spend 20–39% of gross income on operating
expenses
Although a third of firms do not raise rates annually,
half plan to do so in 2007
Source: WORLDCOM Billing and Finances Survey 2007
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
© 2007 THE CATEVO GROUP CONFIDENTIAL NOT FOR DUPLICATION OR DISTRIBUTION 6
7. Billing Practices
Bill all/some clients using a retainer 73% 17%
Bill flat rates for some services 80% 10%
Bill for travel time 65% 23%
Have a minimum project fee 47% 36%
Give clients/prospects a
59% 21%
written/published rate sheet
0% 20% 40% 60% 80% 100%
Source: WORLDCOM Billing and Finances Survey 2007
Sometimes Always
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
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8. Billing Practices
Discount billing rates for non-profit clients 54% 25%
Mark up out-of-pocket expenses by a
specific percent of cost 43% 27%
Do proposals on speculation 48% 23%
Value bill for work over and above actual
hours worked
51% 5%
Bill a flat rate for operating expenses
(added to invoice) 27% 15%
Mark up out-of-pocket expenses using a
flat fee
32% 5%
Source: WORLDCOM Billing and Finances Survey 2007 0% 20% 40% 60% 80% 100%
Source: WORLDCOM Billing and Finances Survey 2007 Sometimes Always
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
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9. So What Can We Do?
Redefine our focus – emphasize our margins (read:
profitability) no matter the billing model
Fight fire with fire – become one with procurement
– Increase efficiency
– Enforce quality (it’s not just about control)
– Learn the language
– Employ financial planning tools
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
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10. CLIENT DATE
PROJECT Catevo
Revenue
REVENUE
Monthly Rate # of Months
Retainer Revenue $ -
FIXED FEE REVENUE Amount
Fixed Project Fee
Creative Service Fee
Market Research Fee
Total Flat Fee Revenue $ -
HOURLY RATE REVENUE Billing Rates Total Hours
Project Lead - $ -
- $ -
- $ -
Sr. Associate - $ -
Jr. Associate - $ -
- $ -
- $ -
- $ -
Total Hourly Rate Revenue - $ -
Ave Bill Rate #DIV/0!
TOTAL FEE REVENUE $ -
Reimbursable Revenue (e.g Media Placement)
Reimbursable Revenue (e.g Marked Up Items)
Reimbursable Expense (e.g Media Costs)
Reimbursable Expense (e.g. Items to be Marked Up)
NET REIMBURSABLE REVENUE $ -
TOTAL REVENUE $ - Total Income
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11. PROJECT COSTS
BILLABLE PERSONNEL COSTS Billable NBD Proposal/Contract Prep Project Delivery Total Cost Rates Total Cost
Project Lead - - - $65.00 $0
- - - $0
- - $0
Sr. Associate - $55.00 $0
Jr. Associate - $45.00 $0
Management (Supervision) - $65.00 $0
- $0
- $0
Total Personnel Costs - - - - $ - Catevo People Costs
Ave. Cost #DIV/0!
NON-BILLABLE PERSONNEL COSTS Non-Billable NBD Proposal/Contract Prep Project Delivery Total Cost Rates Total Cost
Project Lead - $65.00 $0
- $0
- $0
Sr. Associate - $55.00 $0
Jr. Associate - $45.00 $0
Management (Supervision) - $65.00 $0
- $0
- $0
Total Personnel Costs - - - - $ - Catevo People Costs
Ave. Cost #DIV/0!
OUTSOURCE & OTHER COSTS Total Cost
Total Outsource & Other Costs $ - Outsource & Other Costs
GROSS PROFIT #DIV/0! $ - Gross Profit
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
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12. So What Can We Do?
Redefine “PR services”
– Make room for new friends (and billing codes)
– Hiring, training, acquisition, mergers, alliances, etc.
– Explore interplay between PR and other disciplines
Supply chain optimization
Logistics
Interactive
Business development
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
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13. So What Can We Do?
Focus on the Five C’s:
– C-suite
– Capabilities
– Creativity
– Comprehensive financial planning
– Client relationships
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
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14. The Catevo Group
Thank You!
Roger M. Friedensen, APR
Vice President, Integrated Communications
rfriedensen@catevo.com
Bulldog Reporter Agency Management ’07 Summit | New York | 9.28.07
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