Last year, we were talking to a manufacturing firm that was thinking of moving on from its existing agency relationship, and the conversation turned to our hourly billable rate. This firm insisted that we had to have an hourly rate that was $X or lower, which led to a (gentle and finessed) discussion of how they were taking the wrong approach.
Here’s the problem: Focusing on hourly rate makes an assumption that simply isn’t true in marketing–that all marketers work at the same pace. This is an especially bad assumption when it comes to content creation and content marketing.
The problem with focusing on hourly rate is that it’s not the right incentive for delivering marketing that breaks through and has an impact. Particularly when it comes to content marketing, we believe billing by the hour creates a philosophical divide between what the brand wants and what the agency wants.
If your company pays consultants based on billable hours, you’re incentivizing contractors to spend a lot of time, and not necessarily to produce great work or to succeed. Even when a speedy solution is necessary, the provider paid on a billable hour basis has incentive to take his sweet time.
That’s not what you want. At Scribewise, we avoid billable hours whenever we can. Our position is that you pay us to solve your content marketing challenges, and that’s what we’re going to do, as quickly, effectively and efficiently as we can. It doesn’t mean that we won’t spend plenty of time on it; it means that we aren’t concerned with how long it takes before it’s great.
Important caveat: Sometimes billing by the hour really does make sense. This is not a completely black and white issue. However, philosophically, the billable hour does not connote value.
Particularly in a creative business, when inspiration sometimes comes quickly – and sometimes doesn’t – compensating your marketing providers based upon how long it takes seems to make little sense. In fact, you are disincentivizing the brilliant marketer who can routinely create solutions quickly, and rewarding the plodding marketer who simply can’t find that brilliant solution with both hands and a flashlight. What happens is that you, the client, end up paying the same amount for mediocre work that you pay for outstanding work.
When you pay billable hours you’re paying for process, not production. You’re paying for the big agency that sends everyone in and gets a room full of people on the clock simply to soak up billable time (yes, agencies think this way).
At Scribewise, we charge a flat monthly retainer that incentivizes us to produce a high volume of high quality work for our clients. We strive to be as efficient as possible – but if we aren’t, the client doesn’t have to pay extra. The flat “subscription fee” we charge is based upon an anticipated number of stories, but we always attempt to be on the high end of the agreed-upon range of deliverables, and we don’t balk at going above when it makes sense.
In this way, we operate like a newsroom. Our job is to “cover the beat,” just like a beat reporter at a news outlet would. A reporter in a newsroom isn’t paid based upon the number of stories she produces; she’s paid based upon the overall completeness of the coverage. If a client has hired us to write 12-15 articles per month, we don’t charge them extra for the 16th.
We don’t charge by the word – freelance writers typically charge by the number of words they churn out for a client. Again, this incentivizes the writer the wrong way. As any writer will tell you, fewer words should always be the goal. Being concise is paramount. Writing needlessly long is the enemy (even though some SEO-oriented folks will tell you that writing really long articles should be your only goal). So why would you pay more to the provider to produce lower quality?
Admittedly, this is not a perfect system. It can create confusion for companies that historically have purchased marketing services based upon billable hours; you’re used to paying for an agency’s time. The manufacturing firm I mentioned at the outset understood where we were coming from, but it still made them uncomfortable. Doing something a new way can give a company pause.
In the end, any relationship you have with an agency requires trust.
Do you trust that we’ll be there for you every step of the way, rather than disappear for months on end and collect retainer checks?
Do you believe that the quality of product we deliver will be worth the price we charge?
Do you trust that we have the journalistic ethic to tell the story in the best way possible so that it resonates with you audience, regardless of how long it takes?
So far, the answer seems to be yes.