Should you charge for account management time?

January 08, 2017

Should you charge for account management time?

Does your agency charge clients for your account management time? Is "account management" itemised as a line item on your quotes and invoices? Is it charged out, but "hidden" within other line items (e.g. creative) or as part of one overall cost? Perhaps it is not charged out at all...and should that matter? What if your clients don't want to pay for account management time at all?

If account management time is charged to your clients, is it invoiced on an hourly basis, or perhaps charged as a percent of the whole job? Maybe you work under a retainer arrangement, whereby your client pays for x number of hours of account management time per month.

Are you required to keep a daily account of your time (e.g. via a timesheet or online time monitor). If you are, then you will likely be held more accountable for exactly where that time is allocated – what jobs, what activities, etc., and how the cost of your time is going to be recovered. 

Different agencies will have different charging methods for account management; and some types of projects will favour one method over another.

 

Ways of charging account management time

Charging a flat percentage

You will occasionally come across projects where account management time can be charged as a flat percentage. In the case of web or digital projects, account management requirements can be quite “bitsy” - a tiny email here, a short phone conversation there, a quick check of changes - which is difficult to capture by the hour, so a flat fee can work quite well. On your quote and invoice “account (or project) management” would be shown as a separate line item, and be charged at around 10%-30% of the total cost of the job.

This type of flat charging is not a highly recommended method, especially where you can more accurately estimate the amount of time that you will put into a project. You want to get as close to accurate on your estimation as you possibly can, and a flat fee won’t help you do that.

Charging a percentage of the total sale is also risky, because you are at the mercy of whatever your client can negotiate to pay for that project - which may or may not accurately reflect the actual amount of work undertaken. Therefore there is a real risk of under-budgeting for your time.

Charging hourly time, at the end of a project

Charging out account management time (at the end of a project) based purely on the amount of hours you spent on a job puts your client at an immediate disadvantage. Whilst you may be able to recover your agency time cost, your client has no idea what they are going to be invoiced until the end of the job.

This method can certainly work well for very small jobs (such as minor artwork changes, and small web-based projects), but it's not a palatable solution for large projects. Clients want to be able to budget for agency work, and they hate surprises. 

If you are very transparent about the number of hours worked, it also opens you up for that time to be challenged. You may find that you spend an unnecessary amount of time trying to justify either the number of hours you worked on their project, or the hourly rate itself.

Charging a fixed price, quoted up front

This is by far the best way to quote and invoice account management time. Both you and your client know what to expect, and any challenge to the price can be done before you commence work, which is a much easier conversation to have.

The cost can be quoted as either an estimation on the number of account management hours you think will be spent on the project; OR as a measure of value (not based on any hourly charge). This solution is the most fair to both parties, will cover all your costs, and - hopefully - make your agency a good profit.

 

What if your client doesn’t want to pay for your time? 

Clients do not like to pay for something they think should be free. If their perception is that your account management time should be given to them free, then you need to have a chat about exactly what you do in your role, and the work that you do behind-the-scenes.

You may need the support of your management to back you up and explain the value that you bring to the table – and then you need to make sure you bring it! If you are not, realistically, bringing tangible and quantifiable value to the table, then your client may have a valid point. 

Some agencies will “hide” account management charges within other charges. For example, if you regularly do print work for a client and they refuse to pay for account management time, then you may choose to load an additional x% into the mark-up that you put on every print run. Some agencies will increase the hourly rate of their creative team to cover account management time. Though this can work in some instances, it becomes difficult to monitor departmental (and individual) profitability.

 

What if your agency doesn’t want to charge for your time?

It’s one thing for a client to assume that account management time should be free. It’s a whole different ballgame when an agency chooses to give it away for free.

Clients have little appreciation for what they do not have to pay for. When an agency gives account management services away for free, this conveys that your expertise, time and energy are not valuable enough to charge money for. 

Account managers should be considered amongst the most valuable members of your entire agency team. Account managers have the power to make or break an agency's profit; they hold strategic, business-building relationships with the clients (who pay the wages of every agency staff member); the success or failure of projects rests with them; and they are the ones who will masterfully keep invoice-paying clients happy. If the knowledge, skill and experience that goes into account management time is not being fairly compensated for, then something is very wrong with the way account management is perceived and valued within your agency (both internally, and then communicated to your clients). 

If your agency does not charge for account management time, it indicates that your senior agency managers regard account management as a low-level administrative commodity – a mere adjunct to the rest of the creative process. This is the type of environment where you will always be a relatively low paid "do-er", and a person that exists only to take orders and process work. Whilst you may be happy with that type of role, your account management potential is far greater than merely that. 

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