Jan 27, 2025

Secret Marketing Agency Cost Formula (For B2B Agency Pricing)

Updated: January 28, 2025

Do you ever wonder how full-service marketing and advertising agencies set their prices for the services they offer? Why does a website or landing page cost 30% more on one creative agency rate card than on another? How much—and more importantly, why—does the agency rate card, or price list, vary between two firms that are directly across the street from each other? How much does it cost to hire a marketing agency per month? Are marketing agency rates negotiable?

Let’s unpack the mysteries of marketing agency pricing.

Buying Marketing Services Is Like Buying a Car

So, you want to hire an agency to build a website? Picking an agency to build your site can be like shopping for a car—you can choose a $20,000 model or a $100,000 one. Both will have tires, brakes and a steering wheel. But the differences are huge in terms of the materials and technology used. As a result, the reliability and performance will differ greatly.

The same is true when comparing fees for B2B marketing and advertising solutions. Take a simple B2B product brochure. You must ask yourself: “How much content needs to be written, and how technical is the content? How many charts, graphic images and special creative design elements are needed? Can you use library images, or do you need custom photography?” Image quality, paper size, decorative print, finishes, and other considerations go into the final marketing agency prices you receive as a quote or statement of work (SOW).

This is why almost all B2B marketing and advertising agency projects are custom or semi-custom. One agency’s or client’s definition of quality can be very different than another’s. Subsequently, the price will vary.

The Advertising Agency Pricing Model Revealed

Ninety-nine percent of full-service B2B agencies are structured in a similar way. In fact, most general service companies, such as consulting firms, local plumbing companies, legal firms and other service organizations with more than 10 people run their business in the same way. They calculate the number of hours it takes to complete a project or task and multiply it by an hourly rate. They then add in any outside goods and service costs (i.e., printing) and multiply those costs by a small markup to determine the total project cost.

The Hourly Rate

Marketing agency hourly rates are often calculated based on what they need to earn per an employee’s billable hour. The calculation involves a multiplier (usually between 2 and 4, with 3 being the typical industry average), which accounts for expenses such as overhead and desired profit margins. Here’s how it works.

The formula looks at input such as workable hours in a year, the percentage of workable hours an employee has available to work on client projects (75% – 80% is typical) and the percentage allocated to other functions at the marketing company.

The multiplier provides the needed income to cover the cost of a fully burdened employee, including rent, utilities, benefits, training fees, accounting, administrative support staff, business insurance, computers and equipment, plus a little profit. It’s no different than a technology company factoring overhead costs into its software pricing. Full-service B2B and B2C marketing agencies rely on their people as the equivalent of their product.

All service companies, from lawyers to consultants, use the same basic formula with a bit of variation depending on the industry. Smaller B2B and B2C firms where the people are working remotely will mark up the hourly rate between 2x and 2.5x to be positioned as a low-cost provider, while mid-size agencies of 10 or more will be in the 3x range. Larger, global agencies with high overheads or ambitious profit targets will use 4x or even 5x.

The other major factors are the price and experience of the talent used to develop plans and to create and execute projects and campaigns. If one advertising agency pays its creative director $170,000 per year and another pays $72,000 for the same position, the hourly rate will be lower for the same role working on the project, strategy, content or campaign. However, you can generally expect a higher-quality product when you work with an agency that invests in more seasoned creative talent. Experienced professionals tend to work more efficiently and bring fresh insights and forward-thinking ideas to the table. As with most things, you get what you pay for.

Blended Rate vs. Rate Cards

Sixty-eight percent of full-service agencies in the United States use a blended rate in terms of calculating an hourly rate for an employee. They take their entire staff and figure out a rate that blends all salaries. The average blended rate for a full-service marketing agency in today’s market is $165 an hour to $225 an hour in most markets. In the bigger markets, it runs closer to $250 an hour.

The other approach is to use average ad agency rate cards that create a specific hourly rate to hire each employee or position in the firm. Non-blended rates can run anywhere from $100 an hour for a lower-level employee to $500+ an hour for a top-level digital strategist or creative talent out of New York. The rate for a digital marketing agency can vary quite a bit depending on an employee’s experience.

Outside Goods and Services

Most firms will buy certain outside goods and hire services and mark them up anywhere from 5% to 30%, depending on the service or good purchased. This is to cover the cost to source, hire and carry the paper (usually, agency vendors are paid before the agency is paid, and they take a risk that the client will not pay their bill). The markup helps offset the marketing agency costs and risks associated with the firm floating this debt.

Value Pricing and Fixed Pricing

The big buzzword among digital firms a few years back was something called value pricing. In other words, digital marketing agency pricing is structured to charge what the client thinks the value of a certain effort is worth. If your time and materials cost $5,000 for a project, but the client values it at $3,000, then you charge the $3,000. The idea here is that clients can get basic services (say, an email blast) at a certain price from lower-cost vendors, so they don’t value it as much as custom branding work, which could be priced above what the standard hourly rate may indicate.

Fixed package pricing is another model in which a marketing agency charges a specific amount for certain tasks and deliverables and has the client select a package that most closely meets their needs. This model assumes that the services can be packaged in similar boxes and sold as a commodity.

Both pricing list models experienced some initial success, but the agencies using these models have not seen the expected growth in developing relationships with larger brands. Only time will tell if these pricing models will be effective long-term with bigger clients.

Digital Pricing

Most full-service agencies provide creative and digital services, including paid media, SEO, organic search, content syndication, and various other digital offerings aimed at driving brand awareness or generating leads. Typically, these services are priced between 10% and 25% of the actual spend. Lower monthly expenditures—under $10,000—are generally priced at around 20% to 25%. It takes a certain amount of time to manage these smaller budgets. For larger monthly spends starting at approximately $50,000, the fees begin to fall to 17% to 18%. Service fees for spend near $1,00,000 typically drop below 10%. 

Be cautious of firms that price outside these parameters. They may be outsourcing overseas or simply setting up the program and rarely managing it afterward. Many smaller digital shops rotate clients every six to nine months due to underpricing and underdelivering. In contrast, a full-service agency that prices and delivers appropriate value will usually run the same digital programs for an average of two to three years. 

Ultimately, it all depends on the human time needed to manage these programs. In the years to come, AI will reduce the amount of human interaction required for these programs, but the technology isn’t quite there yet.

How Elevation Marketing Prices – The Benchmark Rate

The model I feel is best, and the one we use at Elevation Marketing, is a benchmark rate model. We have two firms that conduct annual surveys of over 200 agencies across the United States, providing us with data on the costs of the top 100-120 typical marketing campaigns, branding, and strategy projects based on region, company size, and a few other factors.

Our process involves budgeting a project based on the client’s requests or needs and then checking the benchmark fee to see if our estimate falls within the range of average ad agency rates. We do this to make sure we are being fair to ourselves and our clients. We are seldom the cheapest (there are always agencies that compete on price, even if they claim otherwise); similarly, we are seldom the most expensive. This approach allows us to craft a customized value proposition for our clients, focusing on how well we deliver ROI and fulfill their highest-priority outcomes.

You Get What You Pay For

You can generally expect a higher-quality product when you work with an agency that invests in more seasoned creative talent. Experienced professionals tend to work more efficiently and bring fresh insights and forward-thinking ideas to the table.

Agencies are living, breathing value propositions. If they price too high for the value they deliver, clients will eventually seek other solutions. Agencies with over 10 years of experience have typically refined and validated their value proposition through long-term marketplace success. For instance, many of our low-cost competitors who won business we felt we should have retained are no longer in operation. Where these types of agencies excel at low pricing, they often fail to deliver on time, on budget or at the level of quality clients expected. As a result, we frequently find ourselves repairing work done by cheaper agencies for our clients.

In the advertising industry, quality endures long after the appeal of low agency fees fades. Our commitment to delivering quality solutions and remarkable client experiences has been the foundation of our success for the past 25 years and continues to drive our company’s growth and prosperity.

About the Author

Scott Miraglia – President
Scott is a balanced risk-taker with nearly three decades of experience starting and growing advertising and marketing agencies. His business acumen is matched with a drive to build creative teams that thrive in open, collaborative work environments. Scott seeks out the best creative individuals, not only to provide quality service to clients but to also help shape the future direction of Elevation Marketing.

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