Choose Your Billing Basis for Profitability and Peace of Mind

By the time I launched The Darnell Works Agency in Los Angeles in 2000, I already had it made, so to speak. I had spent the previous year learning all about account handling and management thanks to the experts at high-tech PR firm The Terpin Group (TTG), which was acquired by Morgen-Walke/Lighthouse in 2001.

While many people aiming to start a PR consultancy might have relied on other references — for example, the authoritative book “Getting Started in Consulting” by the prolific Alan Weiss, Ph.D. — I had seen what worked, firsthand.

Creating a billing system

Based on the monthly budgets of TTG’s illustrious clients, we billed on an hourly basis, and detailed our costs in our period-ending reports. The rates charged for each category of staff member were explicitly detailed in our proposals, so clients knew exactly what to expect. The system allowed us to engage, serve, manage, share our progress, and detail our approaches to our clients’ satisfaction, and keep the cycle turning forward, so long as our clients remained happy with the results.

Still, this system had one major vulnerability: Some account executives had a difficult time recording time charges. Without their records, the system fell apart. To support the team, we had multiple conversations about billing alternatives.

With my own agency, I have continued to rely on the hourly billing system, and all that goes with it. However, those conversations at TTG — and further research I’ve conducted to help myself and others navigate this field successfully — have given me more insights into the alternatives.

Tracking your time

Essentially, I have learned that charging by the hour is not the only — nor necessarily the best — basis for establishing a working relationship with clients. Prompted to gain a better understanding of how my colleagues handle this essential aspect of their business operations, I learned that the flat-fee basis has considerable merits. 

One definite upside is the liberation from timekeeping and time-reporting. If you have clients who agree to work with you on this basis, why not simplify your life and focus on the other aspects of fulfilling their expectations, and substantiating your work?

In my case, as someone who aims to keep life relatively simple, to find clients I enjoy working with who are committed to making public relations part of their business and working with me if I can show them value, I embrace the security and peace of mind that my time-tracking business model affords me and my clients.

In his writing, Weiss asks if it favors us when clients must be prepared to pay for every instance of our service. My answer is yes. Providing value at the agreed-upon rate, on the agreed-upon terms, is fair, square and straightforward, in my book.

To leverage the hourly compensation model for your business, you must have a system for accurately tracking your time. At my agency, I use time-tracking software built for this purpose, but I have found that even using a stopwatch, and sending emails to myself to track my activities, can do the job very effectively. 

A Google Sheets spreadsheet, or even a piece of paper, can be used to compile your time charges day by day. If you use QuickBooks for your business bookkeeping (highly recommended), you can use that to track your time. Also, there are apps like Time Card for Android (there is a free version as well as one that’s $3.99 to download) that I have used that do an excellent job.

What I find equally important to the daily time entries are the descriptions that explain the day’s activities for my clients’ oversight. At the end of a given period, when I deliver the month’s Activity Report and an invoice for the period to come, that is a momentous reckoning. 

It is perfectly reasonable to expect that the client’s executives will review this receipt, that the activities illuminated (based on your descriptions) will be judged alongside any other feats you have helped to accomplish, and if all adds up, your relationship will continue. Otherwise, presenting that report may be one of your final steps on behalf of that client.

There are numerous ways to manage a PR consultancy to engage clients successfully. Deciding what will work best for you and your clients is sure to affect your peace of mind, as well as your profitability. Choose wisely!