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The day of the large retainer fee is over. Upfront and ongoing fees charged by PR, advertising and marketing agencies used to be the normal way to conduct business, but this is no longer the case. Truth be told, it hasn’t been the case for a while and more agencies need to realize this.

The massive stock crash and financial mire the economy finds itself in has affected everyone, from huge corporations to micro-businesses and everyone in-between. This has resulted in many companies either reigning in their agency spend or cutting ties altogether. The main reason for this has been the exorbitant retainer fees charged by many.

Smart agencies stopped this practice a long time ago, and changed over to value-based pricing. Instead of expensive monthly retainers and high hourly rates, value-based pricing charges on delivered results. This could be number of new customers, amount of new revenue, amount of press received, etc.

The benefit to the client is obvious – they aren’t shelling out for a monthly cost that may return very little. They also know that their agency is working properly for them – no results, no huge project fee regardless of success.

Many agencies decry value-based pricing, saying that it isn’t manageable and there are too many variants to take into account. I disagree – this is where getting to know your client comes in. You know, the role you’re being paid for?

As more businesses realize that high-cost retainers are becoming a thing of the past, the more they’ll look for agencies offering value-based alternatives. Will your agency be one?

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Danny Brown
Co-author Influence Marketing: How to Create, Manage and Measure Brand Influencers in Social Media Marketing. #1 marketing blog in world as per HubSpot. Husband. Father. Optimist. Pragmatist. Never says no to a good single malt. You can find me on Twitter - Google+ - LinkedIn.
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