Should your agency charge more?

 |  By: Kate Jones In: Agency management

White office

The cost of everything is going up in January. Inflation means this is always the case of course, but 2022 is set to be inflation on heat (excuse the heating-related pun.)

In fact, the only area of reduced cost is alcohol. A pint in a pub will be 3p cheaper, but according to a landlord interviewed on the BBC, punters are very unlikely to see this 3p reduction. Pubs will heat their premises on the new rate and minimum wage has gone up, so it’ll cost the pub more to deliver a pint - therefore, the cost to the consumer will go up too.

Your heating costs and wage bills are also going up. Are you planning to increase your rates in line with this? If not, then you’re actively reducing your fees because it’s going to cost you more to deliver your service in 2022. So, January could bring an instant hit to your agency’s profit.

But increases shouldn’t only be inflationary. Below we give you some advice on increasing rates, inflationary or otherwise.

Telling your client about an increase in rates

It’s never nice telling a client that you’ve increased your fees, but it shouldn’t be a huge deal, or a huge shock either. Really, clients should expect it just as they expect other increases. If your increase is reasonable and you have an upfront conversation with your clients about the increase, with enough time prior to it kicking in, then there shouldn’t be an issue.

When you’re delivering the news, make sure you highlight the value of the work you’ve delivered to date. Get them to clearly see and understand the return on investment your services bring – and will still bring on the new rates.

If a client is extremely resistant, then it’s likely there are more serious issues brewing and your prices aren’t the root of the problem. In this instance, you need to look at other factors like quality of work, timescales for delivery or perhaps campaign results.

Deciding when to increase rates

Some agencies think that fee increases can only be annual inflation-based increases, but this isn’t the case. If you can evidence the time you’re putting in and the cost you’ve accrued, then you can justify an increase any time of year.

With a strong estimate, preferably based on experience of previous similar projects, you can get a genuine prediction on how long a job is going to take you to deliver. Once you know this, you can work out how much you need to charge your client to achieve your forecasted profit.

If what your client usually pays and what they need to pay in order for you to make your desired profit don’t match, then you’re in a strong position charge your client more. Having data available on past projects will really help you prove to a client that your estimate is genuine and accurate, and this justifies the increased cost to them.

Ultimately, you need to be sure that you’re not rolling out a price because that’s what you’ve always charged. If you do this with all your clients and none of them are paying what they should, then you’re not going to meet your forecasted profit.

If a client can’t or won’t pay what you need them to, then you have to seriously question their value. They may give you a lot of work, but if that work isn’t profitable, then the more they give you, the weaker your position.

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Increasing fees for clients on a retainer

The same principles apply for clients on a retainer. An under-value retainer is going to put a large dint in your profits. It’s like starting every month knowing you’re going to over-service.

A retainer needs to cover the cost of delivery plus your desired profit. And if it doesn’t, say it was set too low in the beginning but now you’ve been working with the client for a while, you’re seeing the discrepancies. Then don’t be afraid to increase it. Just make sure you have the data to back you up, showing the work delivered and time logged.


I hope this snapshot view had given you some food for thought. Increasing rates is always uncomfortable and there’ll always be some concern that you’ll upset a client. But if you have evidence to support your increase and your increase is honest and upfront, then in answer to the question “should your agency charge more?” - of course you should, if you’re delivering more than you’re charging for, or inflation is making it more expensive for you to deliver your service.