Agency Rate Cards: How to Create and Manage Them?

You may have just started working at an agency and you’re asking yourself: what are rate cards?

In short, an agency rate card is a document that contains all relevant information on an agency’s services and fees. It’s a central part of project budgeting and business financial reporting.

Setting up an effective rate card is key to supporting your agency’s profitability and operations management.

Keep reading to learn:

An agency rate card is a document (either physical or digital) that contains key information on how services are priced. It serves as a reference point for customers and internal teams alike. It’s used across a variety of businesses, such as consultancies, creative agencies, marketing agencies, development companies, and more.

For example, a digital marketing agency can have multiple rate cards: one for advertising campaigns, another for creative services such as writing blog posts or video production, one for SEO services, and more.

Rate cards are often used for time & materials billing (that is, projects that are priced on an hourly rate system), but they’re also useful if you’re using other types of pricing models, such as project-based pricing or retainers.

For example, sales teams can use this information to streamline preparing quotes for potential clients, or it can be used by a business project analyst and their team to handle revenue management and forecasting.

We’ll discuss the most popular agency pricing strategies and how to best apply them later in the article.

Rate cards usually include the following information:

Productive is an all-in-one agency management tool with a wide range of features to help you lead a successful agency.

One of these is comprehensive project budgeting, which includes setting up and managing your rate cards.

There are two types of rate cards you can create in Productive:

These two options are accessed on different parts of the platform (company vs client tab), but the process of setting them up is the same.

Let’s get into it!

First, you’ll want to navigate to the right tab and click the button to add a new rate card.

Now, you’ll be able to add services (or rates) to your card. Each service can be customized with several options, including:

You can also customize your agency fees by adding discount or markup percentages or defining whether you’ll be tracking time, expenses, and resource bookings on the service.

Note: One rate card can have multiple services in it.

Once you’ve added one or more services, your rate card will look something like this:

This rate card information can be used when you’re building your project budgets; instead of checking prices and entering costs manually, you can simply select and add data from your existing rate cards.

And that’s it!

If you need to update a lot of information on your rate card (for example, if you want to refresh your pricing as a new year comes around), you can also export this data in a CSV file. After editing data in spreadsheet format, you can reimport your rates to Productive and handle it from there.

For a step-by-step process, check out our article on setting up rate cards in Productive.

You can also use data from Productive, including rate cards, addresses, and other administrative and financial information, to create proposals or quotes for potential clients.

In your Document templates, you can customize your proposal by: changing your language, including a default note or custom footers, attaching files that are bundled with the PDFs, hiding specific labels or fields, and more.

After you’re satisfied, you can save this template and export the file as a PDF. Your finished deal proposal will look something like this:

Once you’ve sent your proposal to a client, you can use Productive’s integrated agency CRM feature to update your client status and track deal progress. If a deal is won, you can convert it to a project and start managing your tasks right away.

Find out more about Productive’s Sales capabilities.

For one, it reduces a lot of administrative work. Setting up your rate cards means you don’t need to check pricing information to build budgets for new projects or create proposals for potential customers.

However, this is only the start of what Productive can do for your business. Its biggest strength is that it’s an interconnected system of capabilities for agency workflows.

For example, once you have your budgets and individual employee rates set up, you can use this data to get powerful project and agency insights.

First, you’ll set up your employee scheduling, and then you can switch to a specific view that shows your revenue and profit margin across the projects, including future dates. This type of forecasting allows you to make more informed decisions to improve project performance and the agency’s financial health.

And this is just a single example. Productive’s features include everything from:

There are a few key things to think through when setting up rate cards for your agency:

Now let’s go through each in more detail.

Depending on the variety of services your agency offers, you’ll decide whether or not to come up with different rate card categories. Maybe having just a standard rate won’t cover the costs of taking on last-minute jobs. Some typical rate categories are standard rates, last-minute or rush job rates, and discount rates:

Consider choosing between different staff rates or one blended rate by looking into cost differences per employee. Many times, media or PR agencies use staff rates, but that doesn’t mean that your agency necessarily needs a staff rate. Blended rates are used mostly in digital agencies or full-service marketing agencies, for projects where multiple employees work on the same project for a specific amount of time.

According to the Wow Company Benchmark report, most agencies use a blended rate, though the percentage is higher among agencies with under £1m fee income (68%). In comparison, 45% of agencies with over £1m+ fee income use blended rates.

Tiered pricing allows agencies to better reflect the value their senior employees and specialized skills bring to the project. This can also increase your agency’s profitability. However, blended rates are simpler to manage (and sell to clients), which can be advantageous when the time to bill a project comes around.

Once you figure out your total cost of Full-time Employees and your overhead cost per employee, markup the amount you got by 20%. And there you go.

The specific amount you should charge is more difficult to pinpoint, but there are some statistics and benchmarks to go off of.

For example, Promethean Research reports that the average blended rate for a digital marketing consultant ranges from $150 to $200 an hour (though this amount differs across industries, agency size, and staff expertise). Larger markets such as New York or California report rates closer to $250 an hour.

Undercharging your services can lead to various issues. It will not only stunt your growth by depriving you of the necessary capital to scale your business, but it will also impact your ability to hire the best talent and stay competitive. Naturally, all of this will lead to a decreased ability to attract new clients (and retain current ones).

All of this is to say that lowering prices to win difficult clients is something that should be considered very carefully.

An advertising agency will often use commission-based pricing, which means that their rates and revenue are tied to the success of their advertising or marketing campaigns. This commission is usually a percentage of a client’s media spend, meaning that earnings will increase (or decrease) proportionally depending on the budget allocated to a campaign.

Source: PPC Agency Costs on Reddit

However, other industry professionals may use different pricing models. For example, a monthly fee based on the size and scope of a campaign or an hourly rate. According to Clutch, the industry average rate of a US PPC management agency is between $100-$149, though this can vary significantly depending on your channel.

So, you’ve now heard a bit about rate cards. But how important is managing rate cards in an agency? And how much of an influence does it have on the success of your agency?

Quite a significant one.

Here are just three reasons why your rate cards are so important (and why they need to be relevant and up-to-date):

1. Rate cards can set your agency up for financial success. With your rate cards established, used, and regularly updated, you’ll eliminate the probability of clients trying to lower your proposals, for one.

2. With standardized rates set for your agency’s services, you’ll also set clear expectations for clients. Later, that will positively influence communication, and projects should end up more successful.

3. Finally, maintaining your rate cards ensures your services are competitive. This is the main reason why it’s so important to review price s regularly. Consider industry benchmarks, the overall state of the market, and the value you’re adding when rethinking your prices.

Setting up a rate card for your agency can be simple, but managing them correctly isn’t always as easy. As time goes by, your agency will most likely face the common challenges that occur with rate cards.

Here are the top three common mistakes agencies make:

An industry best practice is to update your rate cards annually. Why? Because your agency’s biggest expenses (salaries and overhead costs) usually change on a yearly basis, if not even more frequently. Therefore, to make sure that you’re staying profitable and are still competitive in the market, reconsider your prices regularly; some even suggest on a quarterly basis.

If a large chunk of your revenue is coming in from retainers — and research on agency valuations points to a majority of agencies having 50% or more revenue as recurring — you’ll need a tried-and-tested way to break this news to current clients.

This can be tricky, so here are some things you should consider beforehand:

From time to time, we’re all guilty of offering an ad hoc discount or worse—even doing some work for free to save a client or project. While we are in the business of offering services, it’s vital to stand by your rate cards.

Why?

For one, discounts diminish the value of your services and impact client perception. This can work against you in the future in two major ways: one, the client can spread word of mouth, making it more difficult to sell agency services at your regular prices.

Additionally, if you get a client on retainer, this sets a bad precedent for the remaining time of your cooperation. Raising prices to match competition will be more difficult, and you might end up with a long-term, unprofitable project.

If you must offer a discount, it’s important to underline to clients that this is a one-off thing. For example, you can frame it as a “reward” if it’s a client you’ve worked with before.

Otherwise, consider a quid-pro-quo approach. Request referrals from clients, marketing opportunities such as success stories, or better cooperation terms (for ex., more generous project timelines).

Continuing on from the previous point, another big challenge in offering different prices for specific clients is eliminating confusion among your internal team.

These specialized rates can easily be improperly communicated and then shared with other clients as if they were regular prices.

Whether it’s discounts or you’re simply updating your default rates, you’ll need a way to notice and tackle these issues in a standardized way. Agency management tools with budgeting features (like Productive) can help you out in a big way.

With a tool with Productive, you can manage your various rate cards in one place and easily check the projects they’re associated with. This applies to your proposal documents and templates as well.

In short, the main benefit of updating rate cards in one place is evident: everyone has access to your agency’s latest service rates. There’s less confusion as to how to charge services, and your operations are more reliable and efficient.

Here’s a short breakdown of the most popular pricing models and their benefits and downsides:

You can also check out our comprehensive guide to agency pricing strategies to learn more.

Your agency rate cards will differ depending on your agency size, the type of services offered, the industry you’re serving, etc. However, whether you’re running a software development or marketing company, here are some universal takeaways:

Make sure your service rates are standardized and regularly updated. Reconsidering your pricing on an annual basis can help you stay competitive and profitable. Standardization means that you aim to avoid undercharging or discounting certain clients just to save a project, as this can cause financial issues down the line.

Finally, handling your rate cards and updates in one place helps ensure you’re always up-to-date and all teammates are following accurate and timely data.

If you’re looking for a software solution to do all that and more, Productive is a great pick. To learn how to set up rate cards and support your project budgeting, book a demo with Productive today.