7 minute read
Often, companies are faced with the challenge of establishing an effective strategy for marketing, branding, and advertising. Perhaps you are in this very situation, and you’d like to establish the right marketing plan for your company. You may be looking for someone to execute a marketing strategy or provide creative work, such as website development, writing copy, and designing branded materials. This is when many businesses reach out to marketing consultants.
Often, the execution of these tasks might roll into the consultant’s deliverables, but generally a marketing consultant is the outside advisor developing and directing the strategy for all the deliverables. This means that, while a consultant may work on execution, they typically only focus on the high-level strategy, and leave you to do the heavy lifting on executing these tasks.
Full disclosure, the writer of this blog is a marketing consulting firm, so of course, we believe that you should pay as much as possible.
OK that is partially a joke, but it is worth mentioning that you do get what you pay for. The best marketing consultants provide value that can last for years, and often their fees often reflect that. While hourly rates are often still in consideration, this is merely one way to measure the effort put towards the project at hand.
Common Pricing Models for Marketing Consultants
The typical marketing consultant charges based on one of two models. First, and maybe most common, is by an hourly consulting rate. The second is fixed bid on a project-by-project basis. Often this is based on their anticipated number of hours for a project multiplied by the hourly rates of the consultant. Those rates are generally depends on the geographical market of the consultant, economic factors such as the status of the economy, and the consultants current capacity or demand.
As a benchmark, in our experience, these fees tend to be between $65-$300 per hour. This can vary greatly depending on their resume, overhead and demand. For your average marketing consultant, fees are most commonly in the $100-$175 per hour range. This can often cause sticker shock to those that are comparing it to the salary of an employee that might be closer to $30 an hour. What you must do is consider all the things that go into a project.
For simplicity, let’s consider a 10 hour project that is preparing a simple marketing strategy for a short-term marketing campaign. At the common rate of $150 per hour, your investment is $1,500. This might only cost $300 of in-house talent time to work for 10 hours. So why would anyone ever hire a consultant? Why not just hire an in-house marketer to do it instead? The real reasoning boils down to the true cost of a project. Lucky for you, I recently wrote more for those interested in more in the total cost of a marketing budget.
The Cost of Ownership
In general, a “marketing strategist” is worth more than a “marketing coordinator.” I’m generalizing based on common uses of these titles. Strategy is often a small percentage of the work, while executing that strategy might require a lot more time. A marketing coordinator could perhaps demand a salary of $40k to $60k per year, while a strategist can demand the salary of $100k to $150K per year. Those starting numbers put you at $20 per hour versus $50 per hour respectively. Additionally, they will need to have equipment, office space, lunch hours, vacation time, benefits, and there is often lost time at the water cooler that cannot be tracked or recouped.
This increases the cost substantially per hour, but still probably less than a consultant’s hourly fee. The kicker is that a quality employee expects a full-time living. That means that the six figure employee’s 10 hours turns into 40 per week. It’s generally cost prohibitive for most companies to keep the more strategic person on staff on a full time basis. Not only that, it’s rarely necessary.
Getting Peanuts for Gold
So why not just have the lower paid employee do the work? Consider this: would you want your leading business functions, including marketing, to be lead and executed by someone that is not worth paying a $100,000 per year salary?
Let me say that another way... Of course you would love to pay peanuts for gold, but would you want gold if it was only WORTH peanuts? No.
This is where the consultant comes in. A good consultant is worth the higher salary and furthermore, they are taking care of all the costs associated with their employment, and increased risk by owning a business essentially without a full time guarantee. The costs and absence of guaranteed employment can easily account for the total costs.
How Much Should I Pay a Marketing Consultant? A Rule of Thumb
As a rule of thumb, most consulting fee rates should double, or in most cases triple ‚the actual wage of the position being covered. That means that the $50 per hour strategists should charge $100-$150 per hour for his services. Generally, a freelancer is in the double category and a consultant that is part of a broader company which includes physical overhead falls in the triple category. Of course this all varies based on many factors. You might pay them a little more for their time, but you have them only when you need them, for the amount that you need them.
Let’s get more specific though. To take a closer look at value, what if one consultant is able to provide you a 10 hour ($1,500) strategy that yields new sales and a profit increase of $10,000. Would that be worth the expense? Absolutely. As I alluded to before, the best position to be in is to pay based on value - not just time and materials. Imagine that a more strategic consultant is able to offer you similar services, but asks for a flat fee of $100,000, anticipating 5 hours spent on the project. Would you pay that? The “value” in this case is what the results of their work is worth to your business.
If you are paying $1,000 for a week of brainstorming and advice with no return, it might be a total waste of time and money. On the other hand, if you spend the five hours time at $100,000 to put in place a strategic change that turns into an increase of $1 million to your company’s bottom line, that would be $100,000 well spent! In this case, most businesses would be far less concerned with how much billable time it took. My guess is you would take the deal as well.
“The best position to be in is to pay based on value - not just time and materials.”
I hope this equips you to better evaluate a marketing consultant. My advice is to sit down, crunch the numbers, and determine from there if hiring a marketing consultant is right for you. If you decide you’re not in the market for a consultant, you can always use tools like our FREE Marketing Strategy Template to get you halfway there! Simply click the button below and we’ll send you a Digital Marketing Strategy Template to help you get started.