Numbers, budgeting and forecasting are not normally the natural domain for PR professionals. However, if you’ve ever worked in an agency there is one thing we certainly know well – timesheets. But is filling out timesheets and billing our services at an hourly rate devaluing the work we do as a profession?
In this episode I speak to Financial Soulmate for creative agencies, Kathryn Williams, about a different approach to pricing: Value Based Pricing.
Timesheets are not unique to public relations. They are used by lawyers, accountants and management consultants just to name a few. However, according to Kathryn where we fall down in MarComms is we are generally not left brain enough to record our hours properly and take them seriously. But if this is the way we sell ourselves then it IS very serious.
Kathryn wrote this recent blog on Value Based Pricing that piqued my interest. At its core Value Based Pricing looks at what is the ultimate value of a piece of work for a client. It is about looking at what I am giving not what I am going to do and how long it will take. Instead of tracking hours or widgets you are tracking deliverables.
Timesheets are not necessarily broken, she says, they just need to be managed with respect.
The reliance on timesheets also hides the facts there are many other modes of pricing: time, commission, mark up, and Value Based Pricing would be another.
Value Based Pricing should cover your costs as well as recognise the value you are delivering to the client. Kathryn outlines three steps to implementing a Value Based Pricing approach:
- Decide you are going to give Value Based Pricing a go;
- Identify the metrics or targets that are meaningful for the client;
- Assign a value (a price) to those metrics (this will be based on what will the market bear and your confidence).
Introducing Value Based Pricing has flow on effects across an agency. According to Kathryn a lot more agencies are now also hiring from the top down, staffing up based on demand. This fits with the uber-isation of the workforce where talent moves more often and more freely, particularly in our sector where freelancers are widely available. It becomes much more efficient to staff up from a strong pool of freelancers and that could be local or offshore resources.
Although it has been around for a long time this is very much a new space for many agencies. We are not going to see the end of timesheets, rather it should add and complement to the way we bill and ultimately make agencies more efficient and profitable.
Kathryn gives some great one-liners throughout the podcast, here’s a few of my favourites:
- We are talking about how a firm manages its most important asset – its people.
- We continue to give more away and not value ourselves.
- It is about the ROI and the business outcome – not what we do; but rather what we achieve.
- There are thousands of dollars a month left on the floor – look for ways to bill that properly or not spend not so long on the job if we have delivered what we promised.
- Every member of staff should understand the impact of poor timesheets.
In the news this episode a brief discussion on the Public Relations Tech Ecosystem that I released earlier this month.
The technology underpinning the practice of public relations continues to change and evolve and this tool maps the technology ecosystem across 8 different areas of PR practice. It gives practitioners a starting point for what tech tools are out there and I hope it can be shared and added to as this is an area that will continue to evolve and change in coming years.