Larger Agencies Look to Hourly Billing Rates to Make Up for Recent Losses

We noted recently that PR agencies with revenue of $10 million to $25 million (or more) took a hit on their operating profit due to increased staffs, compared with agencies with lower revenue (PR News, July 20).

Now larger agencies are trying to make up for their losses. Billing and utilization (productivity) rates show that agencies with more than $10 million in revenue have increased their billing rates far in excess of agencies with less than $10 million, according to a new study conducted by Gould + Partners for PR News. For example the average hourly billing rate for CEOs and presidents at the larger revenue agencies was $480, compared with $317 for CEOs and presidents at agencies with less than $3 million in revenue. The smaller agencies could do better. Executives at those agencies think the market won’t support higher rates, said Gould + Partners managing partner Rick Gould. “I don’t agree,” he added. “They are short selling their worth.”

Gould + Partners defines billing rates as the hourly rate that a PR agency charges for the labor cost for each staff person, while utilization is the percentage of billable hours to baseline hours (or total available client hours).



This article originally appeared in the August 10, 2015 issue of PR News. Read more subscriber-only content by becoming a PR News subscriber today.