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The cost of a marketing agency can vary widely, but it’s imporant to understand hidden costs as well.

A question we hear often is: How much does a marketing agency charge? There’s a wide range of ways that firms charge their clients. The most common method is a monthly retainer. Most small to mid-sized firms start at about $2,500 per month for about 17-20 hours of professional time. On the higher side, $15,000 a month can be purchased for about 100-120 hours of professional time. This can cover all sorts of ongoing activities — typically those that the client considers high priorities, such as email marketing, content development, social media buys, web site updates, long-term strategy, media relations, digital marketing, sales support, collateral development and advertising. Larger projects, such as a new web site, are often billed separately and can range from $3,500 to $30,000, based on the size of the site and what it can do.

Freelancer marketers typically perform the same activities for slightly less money, but freelancers tend to fall short on high-level strategy, business focus and the what it takes to increase sales. Freelancers lack the team approach to an account and tend to follow the lead of their clients, which are limited to the knowledge and experience of the client.

Much larger agencies, such as traditional advertising firms, often begin monthly budgets around $5,000, and the sky is the limit. We’ve seen retainers as high as $150,000 per month. These agencies bring many more people, resources and perspectives to the table, along with experience working with much larger brands. That’s good. The downside to larger firms, however, is that clients lose production efficiency when many people are involved. For instance, in a large agency, four of five people might work on a single print ad before it ever goes to the client. Then, when the client has changes, those same people all give their blessing before it returns for final approval. This process can consume dozens of hours of professional time, typically in the $150 to $250 per-hour range.

A full-page print ad from a mid-sized agency might cost around $1,000, when a larger agency will charge $3,000 after all the hours are logged. Large corporations don’t mind the added cost because they feel confident they’re getting very high-quality work. But for many company’s $2,000 is a lot of money when a 10-percent difference might seem inconsequential.

Other projects fall into the same equation. A mid-sized firm might charge $2,500 to produce a brochure, when a large ad firm will charge $7,500. If you’re Progressive Insurance, that’s Ok, and it might be worth the added attention. But enhanced technology and improved communications has enabled mid-sized marketing firms to perform nearly the same level of work as the large agencies for a significant savings.

Some agencies tend to hide certain costs, such as advertising. If an ad firm, for instance, purchases a billboard for $3,000 per month, they might bill the client a 15 percent up charge, bringing the cost to $3,450. Those agencies will argue that coordinating the purchase of the ad and billboard takes time and expertise, and that those activities should be compensated. That’s true. But clients need to be sure that they are not already paying for that time through the monthly retainer and not being billed twice for the same activity.