The answer is a resounding YES. You should always share your budget – and share it as early as possible in your discussions with prospective firms so that you both understand the ‘rules of engagement.’ There are folks that think that if they share their budget numbers, the vendor might try to price gouge or charge the maximum fee. The smart firms, and the good firms, need to know what the parameters are in order to put together a proposal that is creative, maximizes value, meets client objectives – and can actually be implemented.
Without any guidance, agencies can dream up fantastical public relations programs that will only gather dust on the shelf because they can’t be funded. Although different firms charge different fees for their services, it’s important for smart marketing shoppers to understand how firms price their services early in the conversation in order to compare competitors offerings. If the only intelligence you have at the end of an RFP is a single budget number out of context, it won’t help you evaluate the value you’ll receive as a client.
If you aren’t sure what public relations services should cost, or what they should cost for your company, or with a certain size firm, you can just ask. Ask an agency what their ‘average’ size budget is or if they have a minimum engagement. You can also ask what their current ‘range’ of retainers is for similar clients. Get an idea if you are in an Audi dealership or Kia when it comes to pricing as well as service before you ask for proposals that you can’t afford. Most agencies will be forthcoming since they don’t want to waste your time, or their own. Addressing these issues in initial talks can make your agency search more effective and efficient.
Some of the questions you should ask regarding fees include:
1. Do you work by the hour or by retainer?
2. Are your retainers based on an estimate of hours to be worked or ‘value’ based pricing?
3. What is your hourly rate? Is it a flat (blended) rate or is it variable based on employee experience?
4. Do you charge extra if you go over the estimated hours in a given month? Do you provide a credit if you work less hours in a given month?
5. What third-party charges are not included in the agency’s retainer?
6. Does the agency mark-up fees for third-party services?
Price should not be the only factor in any engagement. However, it is one of the most critical factors when considering representation. If the fees are unbearable, it won’t matter how talented, creative, knowledgeable and passionate the PR team is. Ensuring that you and your prospective PR firm are compatible on the budget issue will allow you to concentrate on achieving your objectives and maximizing the return on your investment.