How to Price Agency Work

The free, practical guide to hourly rates, fixed fees, value pricing, three-option proposals and price objections.

Agency advisers love telling you the billable hour is dead. Stop selling time. Sell value. Price outcomes. Fine. But how?

What questions should you ask? How do you put a price around value without making it up? When is a fixed fee better? How do you build three options, set an anchor, calculate an hourly floor and respond when the client says it is too expensive?

Most advice stops where the useful part begins. Or the method disappears behind a lead magnet, course or sales call.

This is not one. No form. No funnel. No secret framework held back. The whole method is here.

The billable hour made sense when time was the product. It gave agencies a way to recover the cost of people and clients something they could check. But it never priced the value of the work. It priced how long the work took.

AI is now compressing delivery. The best people can solve in an afternoon what others take a week to do, yet agencies are still sending clients timesheets. If hours are the only thing you sell, getting better and faster gives you less to invoice.

Hourly pricing still has a place. It just cannot be the only answer.

Blair Enns tackled much of this in Pricing Creativity. The issue has become more urgent since. In a separate survey cited by the IPA in 2025, only 27% of agencies believed they were paid a fair price, while 58% reported little or no progress in reforming commercial agreements.

Agencies do not need another lecture about abandoning time. They need a way to price the work on Monday morning.

Start with what the client is buying

There are three basic pricing models:

Enns makes the distinction with a hypothetical loyalty app. The estimated time and testing costs produce a $75,000 time-and-materials fee. Taking on delivery risk and fixing the price produces a $90,000 fee. If the app is expected to help create $1 million in additional annual profit, he illustrates a $200,000 value-based fee.

Same apparent job. Three different things being bought.

The point is not that every app is worth $200,000. It is that cost, price and value are different numbers. Cost tells you what the work takes. Price is the commercial decision. Value sits in the client’s world.

That difference matters to profit. In a simple illustration, an agency with £100 of revenue and £80 of cost makes £20 profit. Raise the price by 10%, with volume and costs unchanged, and profit becomes £30. That is a 50% increase in profit. Cut the price by 10% and profit falls to £10. You have halved it.

Agencies will fight for months to improve utilisation, then give the gain away in one nervous discount.

PRICE THE CLIENT

A small business and a global giant might both ask for a new identity. The words on the brief could be almost identical. The job is not.

For the small business, the identity might appear on one website, one shopfront and a handful of sales materials. There may be two decision makers and a relatively contained downside if something goes wrong.

For the giant, the work might travel through dozens of markets, products, teams, channels and legal systems. More people must approve it. More money sits behind the decision. The cost of confusion or failure is much higher.

The fee should change because the value, exposure, complexity and responsibility have changed.

Price the client, not just the job.

That does not mean looking at a large balance sheet and adding a zero. It means understanding the problem in the client’s world. Price should reflect:

• The value of a successful change.
• The cost of doing nothing.
• The scale and duration of use.
• The number of markets, teams and touchpoints affected.
• The complexity of the decision and rollout.
• The risk the agency is being asked to absorb.
• The rights, speed, access and senior responsibility required.

Nike confirms that Carolyn Davidson invoiced $35 for the Swoosh in 1971, when the business was young. Enns contrasts this with the reported $1 million paid for Pepsi’s 2008 identity redesign. These were not equivalent commissions, which is precisely the point. Time alone cannot explain what a strategically important design decision is worth to different clients.

How to arrive at a price

Value pricing is not guessing what the client can afford. It is a better commercial conversation.

1. Get past the deliverable

If the brief says “we need a new website”, do not start by counting pages. Ask what needs to be different after the website is live.

Does the client need more qualified enquiries? A shorter sales cycle? Greater credibility in a new market? Better conversion? Fewer support calls? Stronger recruitment?

Use questions like these:

• Why now?
• What is not working today?
• What needs to change?
• Who owns that result?
• How will you know it has improved?
• What happens if you do nothing for another year?

If the client cannot answer them, you may not be ready to price the implementation. Sell a paid diagnosis first.

2. Put a sensible value around the change

Start with the economics the client already understands. Look at profit, not impressive revenue numbers.

For a growth opportunity, ask about likely revenue, gross margin, probability and duration. For an efficiency problem, ask what the delay, duplication or waste currently costs. For a risk problem, ask about the exposure and how often it occurs.

Here is a deliberately simple illustration. A client says better positioning could help it win one £1 million contract. That does not make your work worth £1 million. If the contract carries a 30% gross margin, the gross-profit opportunity is £300,000. You still need to test how likely the win is, how much the agency can influence it and what else has to go right.

Use a range:

• Base case: the minimum credible improvement.
• Good case: the result both sides believe is realistic.
• Upside case: what could happen if the work performs exceptionally well.

Not every form of value belongs in a spreadsheet. Faster decisions, reduced launch risk, stronger internal confidence and a team that can implement the work without permanent outside help all matter. Describe them honestly. Do not manufacture precision.

3. Choose the right model

Do not force every job into value pricing.

A relationship can use more than one model. You might value-price the strategic decision, fix the fee for the build and use a bounded capacity arrangement for ongoing production.

4. Know your floor

Calculate your expected internal cost, outside costs, delivery risk and required profit. That gives you a commercial floor.

Expected cost + risk allowance + required profit = minimum sensible fee

Your cost is not the client’s price. It simply stops you accepting work that damages the agency.

The client’s value gives you the other boundary. The final fee sits between the minimum you can responsibly accept and the maximum the client can justify against the opportunity. Judgement decides where.

Say the likely range aloud before writing the proposal. If the client is expecting £20,000 and you are considering £80,000, discover that in a conversation, not after three days spent making a deck.

Always tell the client the price before they see it in a deck, proposal or invoice. Say the number out loud. Stop hiding from difficult commercial conversations. If you cannot state the price clearly and explain why it is fair, that is an immediate problem: either you do not believe the number, you have not earned it through the value conversation, or you are speaking to the wrong person.

When time and materials is right

Hourly pricing is not wrong. Using it without thinking is.

Time and materials can be the right model when:

• The requirement will genuinely change as the work develops.
• The client controls the priorities and volume of work.
• A specialist is working inside the client’s team.
• The agency is providing flexible access to capacity.
• Discovery is needed before either side can define the solution.
• The client requests work outside an agreed fixed scope.

Give the client an estimated range, clear rates, regular reporting and a point at which further spend needs approval. Time and materials should create flexibility, not an open-ended surprise.

Then ask the better question:

Are you charging enough for the hour?

Your hourly rate has to recover more than salary. It must cover employment costs, non-billable time, overhead, leadership, tools, gaps in utilisation, delivery risk and profit.

Required hourly rate = (fully loaded employment cost + overhead contribution + required profit) / realistic billable hours

Do not divide annual cost by every available working hour. People are not billable every hour they are employed.

Here is a simple illustration. If a person’s fully loaded employment cost is £60,000, their share of overhead is £30,000 and the required profit contribution is £30,000, the agency needs to recover £120,000. At 1,000 realistic billable hours, the required rate is £120 an hour. A £95 rate card leaves the agency £25 short on every hour against that plan.

The figures are illustrative, not a benchmark. Use your real costs and real billable capacity. Then check the result after the work:

Realised hourly rate = agency fees billed, excluding pass-through costs, divided by every agency hour actually worked

Include the unbilled overrun. Otherwise you are measuring the invoice, not the economics.

How to build three fixed-price options

One price gives the client a yes-or-no decision. Three prices let them choose how they want to solve the problem.

The options should not be arbitrary quantities of the same stuff. More pages, more concepts and more meetings rarely explain a serious price difference on their own. There are two useful ways to build the choices.

Model 1: Change who does what

The first model changes the allocation of responsibility, risk and support:

1. Decide: You diagnose the problem and define the answer. The client implements it.
2. Build: You create the answer with the client and equip its team to roll it out.
3. Lead: You take greater responsibility for implementation, testing, coordination and sustained progress.

Here is a hypothetical proposal for a B2B company entering a new market. The figures are illustrative, not benchmarks:

All three options solve the central problem. What changes is how much the agency owns and how much risk or work remains with the client.

The £30,000 option must be genuinely useful. The £60,000 option must be the one you would be pleased to sell. The £95,000 option must be a credible improvement, not a fake package invented to make the middle look cheap.

Model 2: Good, better, best

Sometimes the agency will do all the work in every option. A brand project is a good example. In that case, the tiers can change the depth of insight, breadth of the brand system, number of priority applications, level of testing and extent of the rollout.

Here is a hypothetical good, better, best structure for one brand client. Again, the prices are illustrative, not benchmarks:

The agency completes the promised work at every level. The lowest option is not deliberately weak. It is a complete but more contained answer. The middle creates a broader working system. The top option carries the greatest ambition, reach and implementation support.

Good, better, best works when the differences matter to the client. It fails when the tiers are padded with low-value extras or when the bottom option is made unusable to force the buyer upwards.

Make the margin in the middle. It is often the option the client chooses, so build it around high-value, high-margin help: strategic thinking, knowledge transfer, oversight, quality control and senior access. Do not make it the option with the most hands and the least profit.

Build the premium option around risk reduction. More senior access, more testing, closer oversight, faster response or greater implementation responsibility can all reduce the client’s exposure. Clients pay a premium to make risk go away, not merely to receive more stuff.

Use anchoring properly

People judge price comparatively. If you show only £60,000, the client compares it with their budget, a competitor or a number in their head. If you show £95,000, £60,000 and £30,000, they can compare three considered ways to solve the same problem.

Present the highest option first. Explain the additional value and responsibility. Then move down through the choices and show what comes away with each reduction.

That is anchoring. It is not putting a ridiculous number at the top and hoping the middle feels harmless. The anchor has to be real, relevant and deliverable.

Enns opens Pricing Creativity with a UX firm that presented a one-page proposal at $250,000, $400,000 and $600,000. The client wanted the middle option with elements of the top and agreed $475,000. It is one anecdote, not a conversion promise. The useful lesson is that the agency had discussed the problem and the money before the proposal. The document confirmed the decision. It did not begin the sale.

A proposal should confirm a conversation, not replace one.

When the client says: “It’s too expensive”

Do not immediately defend the fee. Do not discount it. Ask:

“Compared with what - the budget you have, another proposal, or the value of solving the problem?”

Then stop talking.

“Too expensive” can mean several different things. You need to know which one:

If the client wants the £75,000 option for £50,000, say:

“We can create a £50,000 option, but it cannot carry the same promise. Let’s decide what comes out.”

If the price moves, something else moves with it: scope, speed, access, terms, rights, responsibility or risk. Quietly doing the original work for less is not negotiation. It is surrender.

Never discount to win the first job. If you reduce the price, take out value or receive something in return, such as a larger commitment, faster payment or better terms. If you make a genuine one-off discount for a loyal client, show the full price and the discount on the proposal and invoice. An undocumented discount becomes the new price.

Sometimes payment terms solve the real problem. Enns tells of a client who would not commit to a $50,000 website but accepted $3,000 a month for 36 months, totalling $108,000. Longer terms created affordability for the client and more risk for the agency, so the total price changed too.

Keep unpaid proposals between one and five pages

Enns says one page. I have always said five. Somewhere between the two is a good rule.

The number matters less than the principle. A proposal should confirm an agreed path, not become an unpaid consulting project. If it requires research, diagnosis or strategic thinking, sell that work first. Do not give away the answer to prove you can find it.

The proposal should contain:

• The business outcome you have agreed.
• The three options and fixed prices.
• Your recommended option and why.
• What is included in each route.
• The client’s responsibilities.
• Payment terms.
• Major assumptions and exclusions.
• What happens when the scope changes.

Present it live to the people who can approve it. Do not email it into the organisation and hope it sells itself. The proposal should record a price you have already discussed, not reveal it. An invoice should simply confirm what was agreed.

The contract then carries the detail: responsibilities, timing, approvals, rights, dependencies and change control. A fixed fee gives certainty for agreed work. It is not permission for unlimited work.

What about the creative pitch?

The agency creative pitch is real. It is not going anywhere simply because agencies dislike unpaid work. But accepting that pitching exists does not mean every invitation deserves a yes.

I used to free-pitch advertising ideas. I never free-pitched brand strategy or positioning, because in that work the thinking is the product. I went seven years without losing an advertising pitch, so I was prepared to throw the kitchen sink at the right one. The win rate made the investment rational.

I treated pitch spend as part of the agency’s marketing budget. My own ceiling was roughly 10% of revenue for all marketing, including pitches. That was a management rule for my agency, not an industry benchmark. Pitch cost included senior time, research, creative development, production, suppliers and the opportunity cost of work we could have been doing elsewhere.

My harder rule is this: if your rolling pitch win rate is below 30%, pitching is not currently your business development model. It is an expensive habit. You can change that, but not by pitching more. Improve the agency’s positioning, qualification, access to decision makers, rehearsal and, ultimately, the work.

Before agreeing to pitch, ask:

• Why have we been invited, and do we have a credible right to win?
• Can we speak to the people making the decision?
• Do we know the budget, criteria and process?
• How many agencies are involved, and is there an incumbent?
• Are they asking for creative expression or the strategic answer itself?
• What will the pitch really cost, including senior time and opportunity cost?
• Can we afford to lose, and what is our rolling win rate?

Today, I pitch much less. Not because pitching is always wrong, but because it has to earn the investment. It is all work. Good work.

Decide in advance who can set or change price. The person hungriest for the sale or closest to the client should not automatically have permission to discount. Give the team clear pricing policies and limits on concessions. A policy is easier to defend than a nervous preference.

Use this on the next opportunity

Before sending your next proposal, answer these questions:

1. Who can say yes? Are we speaking to the person who owns the result and can approve the investment?
2. What problem are we solving? Not the requested deliverable, but the business problem behind it.
3. What will be different if this works? What result will the client see, feel or measure?
4. Why act now? What has triggered the work, and what happens if the client waits another six or twelve months?
5. What is success worth? In profit, cost savings, reduced risk, faster progress or strategic advantage.
6. What can we genuinely influence? What depends on us, and what still depends on the client, its team or the market?
7. What is the client actually buying? Time, a defined output or help creating an outcome?
8. What is the minimum sensible fee? What will it cost to deliver well, absorb the risk and make the required profit?
9. What three choices can we offer? How will the responsibility, support and risk change at each price?
10. Has the client heard the price? Have we said the range aloud and heard their reaction before putting it in a proposal?

If you cannot answer the first six, you probably do not understand the job well enough to price it. If you cannot answer the final four, you are not ready to propose it.

This is a portfolio, not a religion

Some work should still be hourly. Some should be fixed. Some should be priced against value. The IPA’s 2026 Pricing Playbook includes input, output, outcome and hybrid approaches for good reason.

If you want to move away from hours, start with new clients and strategy. Value-price diagnosis and direction first, fix the implementation where the scope is clear, and keep time and materials for genuine variation. You do not need to reprice the entire client base overnight.

Track time internally if it helps you understand cost and capacity. Just do not assume that because an hour can be measured, an hour is what the client should buy.

The broader rule is simple. If the client sees interchangeable hands, hours will feel like the natural unit. If the client sees judgement, expertise and the ability to solve a consequential problem, you have something more valuable to price.

AI has not killed the billable hour. It has exposed its limits.

Frequently asked questions

What is value pricing?

It sets the fee in relation to the value of the client’s desired change, rather than simply multiplying hours by a rate. Your delivery costs still matter, but they set the floor rather than the value.

Is value pricing the same as performance pay?

No. An expected outcome can inform a fixed fee without making payment contingent on the result. Performance pay is a separate model and requires reliable measurement, attribution and shared risk.

Is three-option pricing automatically value pricing?

No. Three hourly estimates are still hourly estimates. The options become useful when they represent genuinely different ways to create value and allocate responsibility.

Should agencies publish prices?

Publish prices for genuinely standardised services. For bespoke work, a minimum engagement or indicative range can qualify buyers without pretending every client has the same problem.

What if procurement asks for one price?

Use the options to reach a decision with the buyer, then submit the selected route in the required format. Procurement does not prevent you having the commercial conversation first.

Are retainers a bad idea?

No. State whether the client is buying strategic access or reserved delivery capacity. “Some agency time every month” is not a clear offer.

About Gellan Watt

Gellan Watt is an exited agency founder, adviser and non-executive director. He founded Thinking Juice (TJ), which became UK Agency of the Year and one of the UK’s top ten creative and digital agencies. Rather than selling it, he merged TJ with other agencies to form Emerge Group. He and his partners sold the group in 2016, by which point it had reached around £60 million in revenue and more than 300 people.

He later served as Chief Commercial Officer at FWD, part of lastminute.com Group. He has served on PLC boards, bought and sold numerous agencies, and invested in high-growth startups and technology businesses. He now advises agencies through The Great Work Co and is the founder of positioning studio Imposition.

About Blair Enns

Blair Enns founded Win Without Pitching. He wrote The Win Without Pitching Manifesto, Pricing Creativity and The Four Conversations, and co-hosts the 2Bobs podcast with David C. Baker.

Source notes

• Blair Enns, Pricing Creativity: A Guide to Profit Beyond the Billable Hour (2018). Book examples, hypotheticals and anecdotes are drawn from the supplied edition.
• The Price Isn’t Right - IPA, July 2025
• IPA Pricing Playbook announcement, March 2026
• The history of the Nike Swoosh - Nike, October 2025
• About Blair Enns and Win Without Pitching
• Books by Blair Enns